UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38056 YEXT, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organi ...

Yext (YEXT) Q1 2026 Earnings Call June 03, 2025 05:00 PM ET Company Participants Nils Erdmann - Senior Vice President, Investor RelationsMike Walrath - CEO and Chair of the BoardNaved Khan - Managing DirectorDarryl Bond - Chief Financial Officer Conference Call Participants Ryan Macdonald - Senior AnalystTom white - Managing Director, Senior Equity Research AnalystRohit Kulkarni - MD & Senior Research Analyst Operator Good afternoon, and welcome to the Yext Incorporated First Quarter Fiscal twenty twenty si ...

Financial Data and Key Metrics Changes - The company reported a strong Q1 performance, outperforming guidance on all metrics, with improvements in gross and net retention, customer satisfaction, and overall value perception across the platform [4][5][35] - There was a tailwind from foreign exchange rates, which contributed to revenue and ARR improvements [33] Business Line Data and Key Metrics Changes - The core business health is improving, with better retention rates and customer satisfaction [5][35] - The new product, Yext Scout, has seen significant interest, with a waitlist of 1,000 customers, indicating a mix of existing and new customers [9][10] Market Data and Key Metrics Changes - The fragmentation of the consumer search market is accelerating, driven by advancements in AI search, which enhances the importance of managing digital visibility for brands [4][22] - Google recently dipped below 90% market share, indicating a shift in the brand discovery landscape [22] Company Strategy and Development Direction - The company aims to strategically reinvest in organic initiatives and pursue opportunistic investments through M&A or partnerships [5][39] - The management is focused on maintaining a conservative outlook due to macroeconomic uncertainties while recognizing the fertile environment for growth [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed caution due to macroeconomic factors but remains optimistic about the growth potential driven by the fragmentation of the search market [21][23] - The company is encouraged by the positive reception of its products and the increasing value perception among customers [42][46] Other Important Information - The company has a strong balance sheet and cash flow, allowing for flexibility in growth initiatives and share buybacks [5][39] - The integration of recent acquisitions, such as Hearsay, is complete, and the company is looking for further M&A opportunities [50][51] Q&A Session Summary Question: Update on Yext Scout and customer interest - Management noted a mix of existing and new customers on the waitlist for Scout, indicating strong demand [10] Question: Balancing enthusiasm with macroeconomic caution - Management acknowledged macroeconomic uncertainties but highlighted the positive shifts in the brand discovery landscape as a potential growth driver [21][23] Question: Drivers of revenue outperformance in Q1 - Revenue improvements were attributed to favorable FX rates and better retention metrics [33][35] Question: Buyback strategy and appetite - The company views buybacks as a valuable tool for capital allocation, especially given the attractive stock price [36][39] Question: Organic growth and retention improvements - Management indicated that improved retention and upsell opportunities are driving organic growth [42][45] Question: Rationale for new loan facility with BlackRock - The new facility provides better terms and flexibility for growth initiatives and potential acquisitions [48][50]

Credit Agreement and Loan Details - The Borrower, YEXT, INC., has requested credit extensions totaling $100 million in Initial Term Loans and up to $100 million in Delayed Draw Term Loans[14] - Proceeds from the Initial Term Loans will be used for repaying existing debt, general corporate purposes, and financing permitted acquisitions[14] - The Applicable Margin for SOFR Loans is set at 5.25% per annum, while for ABR Loans it is 4.25% per annum[24] - The Borrower aims to finance permitted acquisitions with the Delayed Draw Term Loans and Discretionary Delayed Draw Term Loans[14] - The credit agreement is dated May 15, 2025, and involves YEXT, INC. as the Borrower and ACQUIOM AGENCY SERVICES LLC as the Administrative Agent[13] - The total amount available for Delayed Draw Term Loans is capped at $50 million[14] - The Borrower is required to maintain minimum consolidated EBITDA as part of the negative covenants[6] - The credit agreement includes provisions for mandatory prepayments under certain conditions[2] - The Borrower must comply with various affirmative covenants, including maintaining records and compliance with laws[7] - The agreement outlines the conditions of lending, including representations and warranties by the Borrower[5] - The aggregate principal amount of Delayed Draw Commitments equals $50,000,000 as of the Closing Date[70] - The Delayed Draw Availability Period extends until November 15, 2026[69] Financial Performance and Revenue - The company reported a total revenue of $1.5 billion for Q3 2023, representing a 15% increase year-over-year[1] - The company expects revenue guidance for Q4 2023 to be between $1.6 billion and $1.7 billion, indicating a potential growth of 7% to 13%[3] - New product launches are anticipated to contribute an additional $200 million in revenue over the next two quarters[4] - The company reported a consolidated EBITDA of $X million for the fiscal year, reflecting a Y% increase compared to the previous year[89] - The company anticipates a revenue growth of B% for the next fiscal year, driven by new product launches and market expansion strategies[89] - The company reported a revenue of $1.5 billion for Q3 2023, representing a 15% year-over-year increase[110] - The company provided guidance for Q4 2023, expecting revenue to be between $1.6 billion and $1.7 billion, indicating a growth of 10-13%[110] User Growth and Market Expansion - User growth reached 10 million new users in the last quarter, bringing the total user base to 150 million[2] - Market expansion efforts include entering three new countries, projected to increase market share by 5%[6] - The company has completed a strategic acquisition of a smaller competitor for $300 million, expected to enhance product offerings[7] - The company is investing $50 million in R&D for new technology aimed at enhancing user experience[5] - Market expansion efforts are underway in Europe, with a target to increase market share by 5% by the end of 2024[110] - The company plans to expand its operations into E new markets by the end of the fiscal year, aiming for a market penetration rate of F%[89] Cost Management and Operational Efficiency - Cost management strategies have led to a 10% reduction in operational expenses compared to the previous quarter[8] - The company plans to increase its marketing budget by 20% to support new product launches and market expansion[9] - The company has set a target to reduce operational costs by H% through efficiency improvements and process optimization[90] - Cash flow from operations increased to $400 million, reflecting a 20% improvement compared to the same period last year[110] Customer Satisfaction and Engagement - Customer satisfaction ratings improved to 85%, up from 80% in the previous quarter, reflecting better service delivery[10] - A new marketing strategy was introduced, focusing on digital channels, aiming to increase customer engagement by 20%[110] Financial Definitions and Obligations - Consolidated EBITDA is calculated by adding consolidated net income with various expenses, including interest, taxes, depreciation, and non-recurring charges, with a cap of 25% on certain addbacks[58] - Consolidated Net Income excludes income from subsidiaries if dividend payments are restricted and any gains from asset sales outside the ordinary course of business[59] - Consolidated Working Capital is defined as the excess of current assets over current liabilities[60] - Current Assets exclude cash and cash equivalents, while Current Liabilities do not include the current portion of long-term indebtedness[63][64] - "Indebtedness" includes all obligations for borrowed money, bonds, and guarantees, among other financial commitments[117] - The term "Loan Parties" encompasses the Borrower and the Guarantors involved in the loan agreements[129] - Total Debt of the company is determined on a consolidated basis in accordance with GAAP, excluding Synthetic Lease Obligations and certain contingent obligations[195] - Total Net Leverage Ratio is calculated as Total Debt minus Qualified Cash divided by Consolidated EBITDA for the most recently ended Test Period[196] - The company has obligations under various financial instruments, including bonds and notes, which contribute to its overall debt profile[195] - The financial definitions provided are crucial for understanding the company's leverage and financial obligations in the context of its overall strategy[196]

Financial Performance - The company reported a significant increase in revenue, with a year-over-year growth of 25%[21] - Operating expenses rose by 15%, primarily due to increased investments in research and development[21] - Future revenue is projected to grow by 20% in the next fiscal year, driven by new product launches[21] - Cash flow remains strong, with sufficient liquidity to meet operational needs for at least the next 12 months[21] User Growth - The user base expanded by 30%, reaching a total of 1.5 million active users[21] Strategic Investments - The company plans to invest $50 million in international expansion efforts over the next two years[21] - Recent acquisition of Hearsay Social, Inc. is expected to enhance product offerings and customer reach[21] Challenges and Risks - The company anticipates challenges from macroeconomic conditions, including inflation and currency fluctuations[21] Product Development - New product development is focused on enhancing user experience and integrating advanced technologies[21] Sales Strategy - The company aims to maintain and expand its relationships with its Publisher Network to drive sales growth[21]

Financial Data and Key Metrics Changes - The company reported an increase in gross ARR retention to the high 80% range and net retention rates improved across both direct and reseller channels [10] - EBITDA margins are above 20%, with an outlook for over $100 million in EBITDA for fiscal year 2026, indicating strong financial health [10][11] - There was a sequential decline in ARR due to approximately $3.5 million impact from foreign exchange (FX) and a non-FX related decline of about $2.5 million, attributed to contract restructuring [67][68] Business Line Data and Key Metrics Changes - The integration of Hearsay is progressing well, generating expected go-to-market and cost synergies [8] - The launch of Yext Scout has received a highly enthusiastic response from customers, indicating strong demand for new product offerings [12][41] Market Data and Key Metrics Changes - Positive trends were noted in the healthcare and financial services sectors, with heightened urgency for businesses to optimize local presence amid increased regulatory scrutiny [25][26] - The company is seeing improved renewal rates and a tapering decline in core ARR, suggesting a stabilization in customer satisfaction and retention [70][73] Company Strategy and Development Direction - The company is focused on product innovation, particularly in response to the rapid changes driven by AI, which is expected to be a growth driver [9] - There is an emphasis on understanding and adapting to a fragmented search landscape, with the acquisition of Places Scout enhancing the company's capabilities in this area [39][41] Management's Comments on Operating Environment and Future Outlook - Management noted that while the macroeconomic environment remains challenging, there are signs of stabilization and momentum building within the customer base [20][21] - The company is optimistic about ARR growth in fiscal year 2026, driven by improved retention rates and new product offerings [71][76] Other Important Information - The company is maintaining a conservative approach to managing expenses until growth is more evident, with flexibility to invest in R&D or increase EBITDA based on performance [33][35] - The company has a healthy cash position, allowing for various capital allocation strategies, including share buybacks and potential acquisitions [56][58] Q&A Session Summary Question: Outlook for 2026 and changes in the operating environment - Management indicated that there are no significant changes in the assessment of the environment, with headwinds stabilizing and a sense of urgency among customers regarding AI [18][19] Question: Industry-specific factors affecting growth - Management confirmed momentum in healthcare and financial services, with urgency around optimizing local presence across various platforms [24][25] Question: Investment priorities for fiscal year 2026 - The company plans to be conservative in managing expenses while allowing for potential growth investments based on ARR performance [30][33] Question: Contribution of the Places Scout acquisition - The acquisition is not expected to have a meaningful impact on revenue or ARR in the short term, but it enhances the company's technological capabilities [63] Question: Dynamics of ARR in Q4 - The decline in ARR was primarily due to FX impacts and contract restructuring, but there are signs of improving retention and growth potential [67][71]

Core Insights - Yext reported quarterly earnings of $0.12 per share, missing the Zacks Consensus Estimate of $0.14 per share, but showing an increase from $0.10 per share a year ago, resulting in an earnings surprise of -14.29% [1] - The company posted revenues of $113.09 million for the quarter ended January 2025, surpassing the Zacks Consensus Estimate by 0.24% and increasing from $101.11 million year-over-year [2] - Yext shares have increased by approximately 3.9% since the beginning of the year, contrasting with the S&P 500's decline of -1.8% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.14 on revenues of $111.05 million, and for the current fiscal year, it is $0.57 on revenues of $451.06 million [7] - The estimate revisions trend for Yext is currently unfavorable, leading to a Zacks Rank 5 (Strong Sell), indicating expected underperformance in the near future [6] Industry Context - The Technology Services industry, to which Yext belongs, is currently in the top 28% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, Bitfarms Ltd., is expected to report a quarterly loss of $0.04 per share, reflecting a year-over-year change of +33.3%, with revenues projected at $53.82 million, up 16.4% from the previous year [9]

Financial Performance - Q4 fiscal 2025 revenue reached $113.1 million, a 12% year-over-year increase, with a GAAP net loss of $7.3 million or $0.06 per basic share[1]. - For the full fiscal year 2025, total revenue was $421.0 million, with a GAAP net loss of $27.9 million or $0.22 per basic share, and Adjusted EBITDA of $67.0 million[2]. - Q4 revenue was $113.1 million, a 12% increase compared to $101.1 million in Q4 fiscal 2024[30]. - Full year fiscal 2025 revenue was $421.0 million, a 4% increase from $404.3 million in the previous fiscal year[35]. - Revenue for the three months ended January 31, 2025, was $113.1 million, a 11.7% increase from $101.1 million in the same period of 2024[78]. - The company projects Q1 fiscal 2026 revenue to be between $107.3 million and $107.8 million[46]. Profitability Metrics - The company achieved a record Adjusted EBITDA of $24.6 million in Q4, with an Adjusted EBITDA margin of 22%[4]. - Non-GAAP net income for fiscal 2025 was $45.0 million, compared to $42.3 million in fiscal 2024[39]. - Adjusted EBITDA for the fiscal year ended January 31, 2025, was $67.0 million, up from $54.6 million in 2024, indicating improved operational efficiency[83]. - Non-GAAP EPS for fiscal 2026 is projected to be in the range of $0.50 to $0.53, assuming 129.9 million weighted-average basic shares outstanding[46]. - Non-GAAP operating margin improved to 19% in Q1 2025, compared to 12% in Q1 2024[89]. Cash Flow and Liquidity - Cash and cash equivalents were $138.7 million as of January 31, 2025, down from $210.2 million a year earlier, primarily due to the acquisition of Hearsay[41]. - Free cash flow for Q1 2025 was $38,030,000, an increase from $27,612,000 in Q1 2024, marking a growth of 37%[100]. - Cash, cash equivalents, and restricted cash at the end of the period were $138.7 million, down from $210.2 million at the beginning of the period[81]. - Cash and cash equivalents decreased to $123,133,000 from $210,184,000, a decline of approximately 41% year-over-year[75]. Annual Recurring Revenue (ARR) - Total ARR as of January 31, 2025, was $442.7 million, with Direct ARR at $368.2 million, impacted by a $2.9 million negative effect from foreign exchange[19]. - Annual recurring revenue (ARR) was $442.7 million as of January 31, 2025, a 13% year-over-year increase[39]. - Total Annual Recurring Revenue (ARR) increased to $442,662,000 in January 2025, up 13% from $392,182,000 in January 2024[103]. - The dollar-based net retention rate for total customers increased to 93% as of January 31, 2025, up from 92% in the previous quarter[106]. Operational Efficiency - The integration of Hearsay Systems is nearing completion, leading to cost reductions and improved operational efficiency[8]. - Total operating expenses for the three months ended January 31, 2025, were $95.9 million, an increase from $78.4 million in the same period of 2024[78]. - Research and development expenses for the fiscal year ended January 31, 2025, were $77.2 million, compared to $72.0 million in 2024, reflecting continued investment in innovation[87]. Product Development and Market Strategy - The launch of Yext Scout is expected to drive accelerated organic growth, with strong customer engagement noted during previews[7]. - Yext Social has gained traction with 19 direct customers and 30 reseller customers licensing the product since its launch in September[9]. - Yext has shifted towards usage-based pricing in its Reseller partnerships, which is expected to drive overall growth in this channel[110]. - The acquisition of Places Scout is being integrated into Yext's offerings, merging AI visibility with traditional search capabilities[114]. - Yext's platform aims to help businesses manage their digital presence across diverse channels amid the challenges of search fragmentation[111]. Future Outlook - The company plans to achieve full year Adjusted EBITDA between $100 million and $103 million for fiscal year 2026[27]. - The company will no longer provide full year revenue guidance but will continue to offer guidance for quarterly revenue and profitability metrics[26]. - The company anticipates growth in ARR for fiscal year 2026, influenced by the adoption rate of new products and macroeconomic conditions[107]. - The company expects a sequential decrease in revenue in Q1 FY26 due to three fewer calendar days compared to Q4 FY25[108].

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