Yext(US:YEXT)2025-06-09 20:06PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for the quarter ended April 30, 2025, detailing financial position, performance, and cash flows Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | April 30, 2025 (in thousands) | January 31, 2025 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $114,994 | $123,133 | | Total current assets | $246,978 | $285,801 | | Goodwill | $110,667 | $96,782 | | Intangible assets, net | $97,250 | $94,247 | | Total assets | $572,356 | $610,078 | | Liabilities & Equity | | | | Unearned revenue, current | $210,695 | $229,144 | | Total current liabilities | $327,241 | $344,714 | | Total liabilities | $430,331 | $456,885 | | Total stockholders' equity | $142,025 | $153,193 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Account | Three months ended April 30, 2025 (in thousands) | Three months ended April 30, 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $109,483 | $95,990 | | Gross profit | $82,378 | $74,444 | | Income (loss) from operations | $1,118 | $(5,426) | | Net income (loss) | $770 | $(3,817) | | Net income (loss) per share, basic and diluted | $0.01 | $(0.03) | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Three months ended April 30, 2025 (in thousands) | Three months ended April 30, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,725 | $38,309 | | Net cash used in investing activities | $(19,363) | $(647) | | Net cash used in financing activities | $(29,023) | $(1,174) | | Net (decrease) increase in cash | $(6,639) | $35,930 | - The company finalized the accounting for its acquisition of Hearsay and completed the acquisition of Places Scout for $20.3 million in cash during the quarter5062 - Subsequent to the quarter's end, on May 15, 2025, the company entered into a new credit agreement with BlackRock for up to $200 million in term loans and terminated its existing facility with SVB98111117 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, highlighting a 14% revenue increase to $109.5 million, a shift to net income, and growth in key recurring revenue metrics Overview and Recent Developments This section provides an overview of Yext's business, recent acquisitions of Hearsay and Places Scout, and a new $200 million credit agreement with BlackRock - The company acquired Hearsay Social, Inc. in August 2024 and KabanaSoft, LLC (d/b/a Places Scout) on February 7, 2025, for a purchase price of $20.3 million in cash123126 - On May 15, 2025, the company entered into a new credit agreement with BlackRock for term loan facilities up to $200.0 million and terminated its existing credit facility with SVB127 - Management notes that macroeconomic conditions, including foreign currency fluctuations, interest rates, and inflation, have influenced and may continue to impact financial results and customer spending124125 Key Metrics Key performance metrics show Total Annual Recurring Revenue grew 15% to $446.5 million, with improved dollar-based net and gross retention rates Annual Recurring Revenue (ARR) as of April 30 | Customer Type | 2025 (in thousands) | 2024 (in thousands) | YoY Change | YoY % Change | | :--- | :--- | :--- | :--- | :--- | | Direct Customers | $371,851 | $312,060 | $59,791 | 19% | | Third-Party Reseller Customers | $74,618 | $75,218 | $(600) | (1)% | | Total ARR | $446,469 | $387,278 | $59,191 | 15% | Dollar-Based Net Retention Rate as of April 30 | Customer Type | 2025 | 2024 | | :--- | :--- | :--- | | Direct Customers | 95% | 91% | | Third-Party Reseller Customers | 96% | 92% | | Total Customers | 95% | 91% | Dollar-Based Gross Retention Rate as of April 30 | Customer Type | 2025 | 2024 | | :--- | :--- | :--- | | Direct Customers | 87% | 83% | | Third-Party Reseller Customers | 88% | 86% | | Total Customers | 87% | 83% | Results of Operations Revenue increased 14% to $109.5 million, driven by acquisitions, leading to a turnaround from operating loss to net income year-over-year Comparison of Results for the Three Months Ended April 30 | (in thousands) | 2025 | 2024 | Variance ($) | Variance (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $109,483 | $95,990 | $13,493 | 14% | | Gross profit | $82,378 | $74,444 | $7,934 | 11% | | Sales and marketing | $36,209 | $43,254 | $(7,045) | (16)% | | Research and development | $21,896 | $17,059 | $4,837 | 28% | | General and administrative | $23,155 | $19,557 | $3,598 | 18% | | Income (loss) from operations | $1,118 | $(5,426) | $6,544 | N/A | | Net income (loss) | $770 | $(3,817) | $4,587 | N/A | - The 14% revenue increase was entirely driven by the inclusion of Hearsay's revenue; revenue from direct customers increased 18%, while revenue from third-party resellers decreased 3%149151 - Gross margin decreased from 77.6% to 75.2% YoY, primarily due to a $2.4 million increase in amortization expense from acquired intangibles and a $0.8 million increase in royalties152153 - Sales and marketing expense decreased by 16% ($7.0 million) due to lower personnel costs, conference expenses, and advertising, partially offset by higher amortization from the Hearsay acquisition154 Non-GAAP Financial Measures Non-GAAP net income significantly increased to $16.5 million, Adjusted EBITDA more than doubled to $24.7 million, and free cash flow reached $37.2 million Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income | (in thousands) | Three months ended April 30, 2025 | Three months ended April 30, 2024 | | :--- | :--- | :--- | | GAAP net income (loss) | $770 | $(3,817) | | Stock-based compensation expense | $12,659 | $12,065 | | Acquisition-related costs | $4,048 | $— | | Amortization of acquired intangibles | $4,141 | $— | | Tax adjustment | $(5,093) | $(1,896) | | Non-GAAP net income | $16,525 | $6,352 | Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA | (in thousands) | Three months ended April 30, 2025 | Three months ended April 30, 2024 | | :--- | :--- | :--- | | GAAP net income (loss) | $770 | $(3,817) | | Interest expense (income), net | $10 | $(1,968) | | (Benefit from) provision for income taxes | $(17) | $221 | | Depreciation and amortization | $6,855 | $2,963 | | Other expense (income), net | $355 | $138 | | Stock-based compensation expense | $12,659 | $12,065 | | Acquisition-related costs | $4,048 | $— | | Adjusted EBITDA | $24,680 | $9,602 | Free Cash Flow | (in thousands) | Three months ended April 30, 2025 | Three months ended April 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,725 | $38,309 | | Less: Capital expenditures | $(562) | $(647) | | Free cash flow | $37,163 | $37,662 | Liquidity and Capital Resources The company maintains $115.0 million in cash, secured a new $200 million credit facility, and increased its share repurchase program by $50.0 million - Principal sources of liquidity as of April 30, 2025, were cash and cash equivalents of $115.0 million173 - On May 15, 2025, the company entered a new credit agreement with BlackRock for up to $200 million in term loan facilities maturing in 2030, and terminated its existing SVB credit facility183188 - The Board authorized an additional $50.0 million for the share repurchase program in March 2025; during the quarter, 4.5 million shares were repurchased, leaving $54.2 million available under the program189 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from foreign currency, inflation, and interest rates, though management currently deems these risks immaterial - The company is exposed to foreign currency risk from its international operations, but a hypothetical 10% change in the U.S. dollar exchange rate is not expected to have a material effect201 - Inflation has not had a material effect on the business, but significant inflationary pressure on personnel costs could harm results if not offset by price increases202 - Interest rate risk is considered low, as cash and cash equivalents of $115.0 million are held for capital preservation, and a 10% change in interest rates would not have a material impact203204 - The company is exposed to financial institution risk as it holds cash balances at large institutions that may exceed federally insured limits205 Controls and Procedures Management concluded the company's disclosure controls were effective as of April 30, 2025, with ongoing integration of Hearsay's internal control structure - 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 April 30, 2025207 - Following the August 2024 acquisition of Hearsay, the company is in the process of reviewing and integrating Hearsay's internal control structure208 - No other changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting208 PART II. OTHER INFORMATION Legal Proceedings The company is not currently a party to any legal proceedings deemed material to its business or financial condition - The company is not currently a party to any legal proceedings that it believes are material to its business or financial condition210 Risk Factors This section details significant risks to the company's business, including slowing growth, integration challenges, competition, and evolving regulations Risks Related to Our Business and Industry Key business risks include slowing revenue growth, a history of losses, integration challenges from acquisitions, and reliance on third-party resellers - Revenue growth has slowed, and without the Hearsay acquisition, revenue would have slightly declined year-over-year for the three months ended April 30, 2025216 - The company has a history of losses, with an accumulated deficit of $706.4 million as of April 30, 2025, and may not achieve or sustain profitability219 - Acquisitions, such as Hearsay and Places Scout, could divert management's attention, result in dilution, and disrupt operations if not integrated successfully222225 - A significant portion of revenue is dependent on third-party reseller customers, whose efforts the company does not control, and on a few large customers263265 Risks Related to Information Technology, Intellectual Property, and Data Security Risks include security breaches, intellectual property infringement, reliance on open-source software, and compliance and reputational challenges from generative AI - A security breach or network attack could interrupt service, result in unauthorized data access, harm the company's reputation, and lead to significant liability294295 - The company's use of generative AI is a new and developing technology that presents compliance, reputational, and legal risks, including unintended biases, data disclosure, and potential copyright issues314316317 - The platform's reliance on open-source software could expose the company to unanticipated license restrictions, and its use of third-party licensed software could lead to increased costs or service disruptions if licenses cannot be maintained306307 Risks Related to Laws, Regulation and Taxation The company faces risks from evolving data privacy and AI regulations, anti-corruption laws, export controls, and complex tax laws across jurisdictions - The company is subject to evolving data privacy laws like the CCPA and GDPR, and non-compliance could result in significant fines, litigation, and reputational harm321322326 - New and developing regulations for Artificial Intelligence, such as the EU's AI Act, could impose significant compliance costs and affect the company's use of AI technologies in its products334335 - The company's ability to use its net operating loss carryforwards and other tax attributes may be limited by ownership changes under Section 382 of the Code350 - The company is subject to anti-corruption laws (like the FCPA), export controls, and economic sanctions, which could impair its ability to compete internationally and subject it to penalties for non-compliance336338 Risks Related to Ownership of Our Common Stock and Our Status as a Public Company Risks include stock price volatility, potential dilution from future stock sales, impact of share repurchases, and anti-takeover provisions affecting mergers - The market price of the company's common stock has been and may continue to be volatile, influenced by factors such as fluctuating operating results, analyst recommendations, and broad market trends356 - Future sales and issuances of capital stock, including for equity compensation, could result in substantial dilution to existing stockholders359362 - The company's share repurchase program could affect stock price volatility and will diminish cash reserves, potentially impacting the ability to pursue future strategic opportunities365 - Provisions in the company's certificate of incorporation and bylaws, along with Delaware law, could make a merger, tender offer, or proxy contest difficult, potentially depressing the stock price366367 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's stock repurchase activity, with 4,473,633 shares repurchased and $54.2 million remaining in the program Issuer Purchases of Equity Securities (Q1 FY2026) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining in Program (in millions) | | :--- | :--- | :--- | :--- | | Feb 2025 | 575,658 | $6.59 | $28.2 | | Mar 2025 | 1,405,917 | $6.29 | $69.3 | | Apr 2025 | 2,492,058 | $6.06 | $54.2 | | Total | 4,473,633 | | | - As of April 30, 2025, approximately $54.2 million remains available for future purchases under the company's share repurchase program370 Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - None371 Mine Safety Disclosures This item is not applicable to the company - Not applicable372 Other Information No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - During the three months ended April 30, 2025, no director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement373 Exhibits This section lists exhibits filed with the Form 10-Q, including acquisition agreements, a new credit agreement, and officer certifications - Key exhibits filed include the Hearsay merger agreement, the Places Scout purchase agreement, and the new credit agreement with BlackRock374 - Certifications by the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are included as exhibits374