Yext(YEXT) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Unaudited financial statements for July 31, 2022, show revenue up 5% to $199.7 million, a $45.8 million net loss, and total assets decreasing to $480.3 million Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | July 31, 2022 | January 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $187,906 | $261,210 | | Accounts receivable, net | $53,422 | $101,607 | | Total current assets | $290,300 | $410,353 | | Total assets | $480,324 | $620,335 | | Liabilities & Stockholders' Equity | | | | Unearned revenue, current | $165,889 | $223,427 | | Total current liabilities | $231,324 | $290,704 | | Total liabilities | $341,378 | $408,465 | | Total stockholders' equity | $138,946 | $211,870 | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended July 31, 2022 | Three Months Ended July 31, 2021 | Six Months Ended July 31, 2022 | Six Months Ended July 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $100,869 | $98,124 | $199,671 | $190,116 | | Gross Profit | $73,787 | $71,509 | $147,861 | $141,647 | | Loss from operations | $(19,521) | $(26,412) | $(45,023) | $(43,644) | | Net loss | $(19,991) | $(27,592) | $(45,830) | $(45,223) | | Net loss per share, basic and diluted | $(0.16) | $(0.22) | $(0.36) | $(0.36) | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Six months ended July 31, 2022 | Six months ended July 31, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(7,305) | $2,449 | | Net cash used in investing activities | $(3,875) | $(10,555) | | Net cash (used in) provided by financing activities | $(56,568) | $17,585 | | Net (decrease) increase in cash and cash equivalents | $(73,304) | $10,079 | | Cash and cash equivalents at end of period | $187,906 | $240,490 | - The significant cash used in financing activities for the six months ended July 31, 2022, was primarily due to $58.7 million in common stock repurchases[25] Notes to Condensed Consolidated Financial Statements - The company operates as a single operating segment, providing the Yext platform which organizes a business's facts into a Knowledge Graph to provide answers across search engines, voice assistants, and a business's own website[28][34] Revenue by Geographic Region (in thousands) | Region | Three months ended July 31, 2022 | Six months ended July 31, 2022 | | :--- | :--- | :--- | | North America | $81,082 | $159,791 | | International | $19,787 | $39,880 | | Total revenue | $100,869 | $199,671 | - As of July 31, 2022, the company had $326.6 million of remaining performance obligations, of which $310.3 million is expected to be recognized as revenue over the next twenty-four months, a decrease from $404.9 million as of January 31, 2022[44] - In March 2022, the Board of Directors authorized a $100.0 million share repurchase program, with 10.2 million shares purchased for $58.9 million as of July 31, 2022, leaving approximately $41.1 million available[79] - A putative class action lawsuit was filed against the company in June 2022, alleging false and/or misleading statements regarding the company's business and the effects of the COVID-19 pandemic, which the company intends to vigorously defend[94] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports a 5% revenue increase to $199.7 million for the six months ended July 31, 2022, maintaining strong liquidity with $187.9 million cash Revenue Comparison (in thousands) | Period | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended July 31 | $100,869 | $98,124 | $2,745 | 3% | | Six Months Ended July 31 | $199,671 | $190,116 | $9,555 | 5% | - Revenue growth was negatively impacted by foreign currency exchange rates, with a negative impact of approximately $2.8 million and $4.2 million for the three and six months ended July 31, 2022, respectively, resulting in constant currency growth of 6% and 7%[117][125][139] - For the six months ended July 31, 2022, the increase in cost of revenue was primarily driven by a $2.9 million increase in personnel-related costs due to higher headcount, while operating expenses increased due to higher personnel-related costs in R&D and G&A, and increased travel and events in Sales & Marketing[127][129][130] GAAP vs. Non-GAAP Net Loss Reconciliation (in thousands) | Metric | Six months ended July 31, 2022 | Six months ended July 31, 2021 | | :--- | :--- | :--- | | Net loss (GAAP) | $(45,830) | $(45,223) | | Stock-based compensation expense | $34,168 | $35,000 | | Non-GAAP net loss | $(11,662) | $(10,223) | - As of July 31, 2022, the company had $187.9 million in cash and cash equivalents, believed sufficient for at least the next 12 months, and a $50.0 million revolving loan facility with $35.9 million available[140][147] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from foreign currency, inflation, and interest rates, with a 10% change in rates not materially affecting financials - The company is exposed to foreign currency risk from non-U.S. subsidiaries, but a hypothetical 10% change in the U.S. dollar's value is not expected to have a material effect[162] - Inflation has not had a material effect on the business, but future significant inflationary pressures on personnel costs could harm results if not offset by price increases[163] - The company does not anticipate material risks from changes in interest rates, as its $187.9 million cash and cash equivalents are primarily for capital preservation and liquidity, and a hypothetical 10% change would not have a material impact[164][165] Item 4. Controls and Procedures Management concluded disclosure controls were effective as of July 31, 2022, with no material changes in internal financial reporting controls - Based on an evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of July 31, 2022[168] - No changes in internal control over financial reporting occurred during the six months ended July 31, 2022, that have materially affected, or are reasonably likely to materially affect, internal controls[169] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company faces a putative class action lawsuit filed June 17, 2022, alleging false statements, which it intends to vigorously defend - A putative class action lawsuit was filed on June 17, 2022, naming the Company, its former CEO, and former CFO as defendants[172] - The complaint alleges false and/or misleading statements about the Company's business, operations, and prospects, including the effects of the COVID-19 pandemic, for securities purchased between March 4, 2021, and March 8, 2022[172] Item 1A. Risk Factors The company faces significant risks including slowing revenue growth, net losses, economic impacts, leadership changes, and dependence on strategic partners - The company's revenue growth rate has slowed from 10% in fiscal 2022 to 5% for the six months ended July 31, 2022, and is expected to be slower in the coming year[179] - Yext has a history of losses, with a net loss of $20.0 million for the quarter ended July 31, 2022, and an accumulated deficit of $656.4 million, with future profitability not guaranteed[180] - The COVID-19 pandemic has had and is expected to continue to have an adverse effect on business, with some customers reducing, suspending, or delaying technology spending[184][185] - The company has experienced significant leadership changes, including the resignation of its CEO and CFO in March 2022, which could have near-term effects on business, growth, and profitability[191] - Growth depends on strategic relationships with approximately 200 third-party service and application providers (Knowledge Network), and losing access to key providers like Google could lead to a significant loss of customers[203] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 10,224,095 shares through July 31, 2022, with $41.1 million remaining under the repurchase program Issuer Purchases of Equity Securities (March - July 2022) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining (in millions) | | :--- | :--- | :--- | :--- | | Mar 2022 | 665,366 | $7.06 | $95.3 | | Apr 2022 | 4,172,818 | $6.20 | $69.4 | | May 2022 | 4,558,694 | $5.33 | $45.2 | | Jun 2022 | 391,858 | $5.30 | $43.1 | | Jul 2022 | 435,359 | $4.65 | $41.1 | Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[318] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[319] Item 5. Other Information The company reports no other information for this period - None[320] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and Interactive Data Files (Inline XBRL) - Exhibits filed include certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[322] - The filing includes Interactive Data Files (Inline XBRL) for the condensed consolidated financial statements and notes[322]