Yext(US:YEXT)2024-06-10 20:08PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents Yext's unaudited condensed consolidated financial statements for the quarter ended April 30, 2024, detailing financial position, performance, and cash flows, including notes on key events Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | April 30, 2024 (in thousands) | January 31, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $246,114 | $210,184 | | Total current assets | $339,574 | $359,911 | | Total assets | $481,730 | $508,810 | | Liabilities & Stockholders' Equity | | | | Unearned revenue, current | $185,220 | $212,210 | | Total current liabilities | $235,515 | $267,774 | | Total liabilities | $326,056 | $361,636 | | Total stockholders' equity | $155,674 | $147,174 | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statement of Operations (Unaudited) | Account | Three months ended April 30, 2024 (in thousands) | Three months ended April 30, 2023 (in thousands) | | :--- | :--- | :--- | | Revenue | $95,990 | $99,453 | | Gross profit | $74,444 | $78,103 | | Total operating expenses | $79,870 | $79,335 | | Loss from operations | $(5,426) | $(1,232) | | Net loss | $(3,817) | $(412) | | Net loss per share, basic and diluted | $(0.03) | $0.00 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statement of Cash Flows (Unaudited) | Activity | Three months ended April 30, 2024 (in thousands) | Three months ended April 30, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $38,309 | $26,744 | | Net cash used in investing activities | $(647) | $(944) | | Net cash (used in) provided by financing activities | $(1,174) | $312 | | Net increase in cash and cash equivalents | $35,930 | $26,636 | | Cash and cash equivalents at end of period | $246,114 | $216,850 | Notes to Condensed Consolidated Financial Statements - The company operates as one operating segment, providing a digital presence platform that includes products like Listings, Reviews, Pages, and Search2632 Revenue by Geographic Region (in thousands) | Region | Three months ended April 30, 2024 | Three months ended April 30, 2023 | | :--- | :--- | :--- | | North America | $75,357 | $78,500 | | International | $20,633 | $20,953 | | Total revenue | $95,990 | $99,453 | - As of April 30, 2024, the company had $431.6 million of remaining performance obligations, with $375.2 million expected to be recognized as revenue over the next twenty-four months43 - On June 4, 2024, the company committed to a restructuring plan to reduce its workforce, estimating restructuring charges of approximately $5 million, primarily for severance, to be incurred mostly in Q2 fiscal 202576 - On June 10, 2024, Yext entered into an agreement to acquire Hearsay Social, Inc. for $125 million in cash, a $20 million bonus pool for key employees, and up to $75 million in contingent earnout consideration. The acquisition is expected to close in the second half of fiscal year 202577 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a 3% year-over-year revenue decrease, declines in key metrics, and the initiation of a restructuring plan and a significant acquisition, alongside a GAAP net loss and strong operating cash flow - On June 4, 2024, the company initiated a restructuring plan to reduce its workforce by approximately 12% compared to January 31, 2024 levels, expecting to incur about $5 million in charges, mostly in Q2 fiscal 202584 - The company agreed to acquire Hearsay Social, Inc. for $125 million in cash, plus a $20 million bonus pool and up to $75 million in contingent earnout consideration, with the deal expected to close in the second half of fiscal 20258586 Key Metrics Comparison | Metric | April 30, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Total Annual Recurring Revenue (ARR) | $382.6M | $398.3M | | Total Dollar-Based Net Retention Rate | 91% | 96% | Q1 Fiscal 2025 vs. Q1 Fiscal 2024 Results (in thousands) | Account | Q1 2025 | Q1 2024 | Variance ($) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $95,990 | $99,453 | $(3,463) | (3)% | | Gross Profit | $74,444 | $78,103 | $(3,659) | (5)% | | Loss from Operations | $(5,426) | $(1,232) | $(4,194) | 340% | | Net Loss (GAAP) | $(3,817) | $(412) | $(3,405) | 826% | | Adjusted EBITDA (Non-GAAP) | $9,602 | $14,448 | $(4,846) | (34)% | Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks related to foreign currency exchange rates, inflation, and interest rates, though management does not believe these have had a material effect to date - Foreign Currency Risk: The company does not expect a 10% change in the U.S. dollar's value to have a material effect on its financial position or results of operations147 - Inflation Risk: While inflation has not had a material effect, the company notes that significant inflationary pressure on personnel costs could harm the business if not offset by price increases148 - Interest Rate Risk: The company does not anticipate being exposed to material risks from changes in interest rates, and a hypothetical 10% change would not have had a material impact150 Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of April 30, 2024, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of April 30, 2024153 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls154 PART II. OTHER INFORMATION Legal Proceedings The company reports that it is not currently a party to any legal proceedings that are considered material to its business or financial condition - Yext is not currently a party to any material legal proceedings157 Risk Factors This section details significant risks that could adversely affect Yext's business, including challenges related to revenue growth, profitability, economic conditions, acquisitions, competition, data security, and evolving regulations - Business & Industry Risks: The company highlights that its revenue growth has slowed and contracted, with a 3% decline in the recent quarter. It has a history of GAAP net losses ($3.8 million for the quarter) and may not achieve future profitability. The business is also exposed to risks from economic conditions, competition, and customer churn163164 - Technology & IP Risks: The company is vulnerable to security breaches and network attacks. It faces risks from potential intellectual property infringement claims by third parties and the costs of protecting its own IP. The use of generative AI is noted as a new and developing technology that presents compliance and reputational risks162259 - Legal & Regulatory Risks: Yext is subject to complex and evolving government regulations, particularly concerning data privacy (like GDPR and CCPA), which could increase compliance costs and legal exposure. The regulatory framework for AI is also rapidly changing and could adversely affect the use of such technologies in its products163265278 - Stock Ownership Risks: The market price of the company's common stock has been and may continue to be volatile. The company does not intend to pay dividends in the foreseeable future, and anti-takeover provisions in its charter and bylaws could depress the trading price163302308 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None314 Other Information The company states that no director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended April 30, 2024 - During the quarter, no director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement317