Yext(YEXT) - 2026 Q2 - Quarterly Results

Executive Summary & Key Highlights Yext reported strong Q2 FY2026 results exceeding guidance, alongside a non-binding acquisition proposal from its CEO Second Quarter Fiscal 2026 Performance Overview Yext exceeded Q2 FY2026 guidance for revenue and Adjusted EBITDA, reporting strong year-over-year growth - Yext exceeded its prior quarterly guidance for both revenue and Adjusted EBITDA, and was within the high end of its range for non-GAAP EPS[2] Key Financial Highlights (Three months ended July 31, 2025 vs 2024) | Metric | Q2 FY2026 (2025) | Q2 FY2025 (2024) | YoY Change | | :-------------------------- | :--------------- | :--------------- | :--------- | | Revenue | $113.1 million | $97.9 million | 16% | | Adjusted EBITDA | $26.4 million | $9.8 million | 169.4% | | Adjusted EBITDA Margin | 23% | 10% | +13 percentage points | | Net Income (Loss) | $26.8 million | $(4.1) million | Not Applicable | | Non-GAAP EPS (basic) | $0.13 | $0.05 | 160% | | ARR (as of July 31) | $444.4 million | $387.3 million | 15% | - Results for the three months ended July 31, 2025, included the results of Hearsay Social, Inc. and KabanaSoft, LLC (Places Scout), which were not included in the comparative period of the three months ended July 31, 2024[4] Pending Acquisition Proposal Yext's CEO proposed to acquire outstanding shares, leading to Q2 FY2026 conference call cancellation - Michael Walrath, CEO and Chairman, submitted a non-binding proposal to acquire all outstanding shares of Yext not already owned by him at $9.00 per share in cash[3] - In light of the pending proposal, Yext will not hold a corresponding conference call[3] Company Information This section details Yext's platform, forward-looking statement disclaimers, and contact information About Yext Yext is a leading brand visibility platform for discovery and engagement across digital channels - Yext (NYSE: YEXT) is the leading brand visibility platform, built for discovery and engagement across AI search, traditional search, social media, websites, and direct communications[15] - The platform is powered by over 2 billion trusted data points and a suite of integrated products, offering real-time insights, AI-driven recommendations, and execution at scale[15] Statement Regarding Forward-Looking Statements Forward-looking statements are subject to risks and uncertainties, which may cause actual results to differ - The release includes forward-looking statements regarding Yext's future expectations, beliefs, intentions, or strategies, including the effects, benefits, and challenges of a potential acquisition transaction[16] - These statements are subject to many risks and uncertainties, including the possibility that any acquisition transaction does not occur, conditions are not satisfied, required approvals are not obtained, potential litigation, and possible disruption to current plans and operations[16][18] - Yext assumes no obligation to update or revise any forward-looking statements[18] Contact Information Contact details are provided for investor relations and public relations inquiries - Investor Relations can be reached at IR@yext.com[39] - Public Relations can be reached at PR@yext.com[39] GAAP Financial Statements This section presents Yext's GAAP financial statements, including balance sheets, operations, and cash flows Condensed Consolidated Balance Sheets Yext's total assets increased to $626.2 million, driven by cash and new long-term debt Condensed Consolidated Balance Sheets (Selected Data, in thousands) | Metric | July 31, 2025 | January 31, 2025 | | :-------------------------------- | :------------ | :--------------- | | Total assets | $626,166 | $610,078 | | Cash and cash equivalents | $178,761 | $123,133 | | Accounts receivable, net | $66,404 | $112,942 | | Goodwill | $110,686 | $96,782 | | Total liabilities | $473,637 | $456,885 | | Unearned revenue, current | $185,592 | $229,144 | | Long term debt, net | $98,281 | — | | Total stockholders' equity | $152,529 | $153,193 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) Yext reported Q2 FY2026 net income of $26.8 million, a significant improvement from a prior year net loss Condensed Consolidated Statements of Operations (Selected Data, in thousands) | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Revenue | $113,094 | $97,887 | | Gross profit | $85,034 | $75,594 | | Total operating expenses | $55,360 | $83,160 | | Income (loss) from operations | $29,674 | $(7,566) | | Net income (loss) | $26,751 | $(4,057) | | Net income (loss) per share, basic | $0.22 | $(0.03) | | Net income (loss) per share, diluted | $0.03 | $(0.03) | - General and administrative expenses showed a significant change, reporting a credit of $(61) thousand in Q2 FY2026 compared to an expense of $22,623 thousand in Q2 FY2025[43] Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $46.1 million, with investing outflow and financing inflow Condensed Consolidated Statements of Cash Flows (Selected Data, in thousands) | Metric | Six months ended July 31, 2025 | Six months ended July 31, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $46,132 | $27,660 | | Net cash used in investing activities | $(19,936) | $(1,192) |\n| Net cash provided by (used in) financing activities | $40,748 | $(2,008) | | Cash, cash equivalents and restricted cash at end of period | $209,538 | $234,823 | - Key drivers for cash flow from operating activities included net income of $27.5 million and stock-based compensation expense of $25.6 million, partially offset by adjustments to contingent consideration of $(21.6) million[45] - Financing activities were significantly impacted by proceeds from debt issuance of $99.0 million and share repurchases of $(45.4) million[45] Non-GAAP Financial Measures & Reconciliations This section defines and reconciles Yext's non-GAAP financial measures for core business performance Non-GAAP Measurements Definitions Yext uses non-GAAP measures, excluding stock-based compensation and acquisition costs, for consistent performance - Non-GAAP financial measures exclude the effects of stock-based compensation expenses, acquisition-related costs, and amortization of acquired intangibles to provide consistency and comparability with past financial performance[19][20][22] - Adjusted EBITDA is defined as GAAP net income (loss) before interest, taxes, depreciation, amortization, other income/expense, stock-based compensation expense, and acquisition-related costs[23] - Constant currency revenue provides a framework for assessing performance by excluding the effect of foreign currency rate fluctuations, while free cash flow is defined as net cash from operating activities less capital expenditures[25][26] Adjusted EBITDA Reconciliation Yext's Adjusted EBITDA for Q2 FY2026 significantly increased to $26.4 million, with an improved 23.3% margin GAAP Net Income (Loss) to Adjusted EBITDA Reconciliation (in thousands) | Metric | Three months ended July 31, 2025 | Three months ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | GAAP net income (loss) | $26,751 | $(4,057) | | Adjusted EBITDA | $26,369 | $9,787 | | GAAP net income (loss) as a % of revenue | 23.7% | -4.1% | | Adjusted EBITDA margin | 23.3% | 10.0% | Non-GAAP Operating Expenses Reconciliation Non-GAAP operating expenses decreased to $64.7 million (57% of revenue) in Q2 FY2026, indicating improved efficiency Non-GAAP Operating Expenses Reconciliation (Three months ended July 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | GAAP sales and marketing | $32,069 | $41,957 | | Non-GAAP sales and marketing | $29,959 | $38,802 | | Non-GAAP sales and marketing as a % of revenue | 26% | 40% | | GAAP research and development | $23,352 | $18,580 | | Non-GAAP research and development | $19,149 | $15,973 | | Non-GAAP research and development as a % of revenue | 17% | 16% | | GAAP general and administrative | $(61) | $22,623 | | Non-GAAP general and administrative | $15,582 | $14,581 | | Non-GAAP general and administrative as a % of revenue | 14% | 15% | Non-GAAP Gross Profit and Operating Income Reconciliation Non-GAAP gross profit increased to $88.3 million (78.1% margin), showing improved operational efficiency Non-GAAP Gross Profit and Operating Income Reconciliation (Three months ended July 31, in thousands) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | GAAP gross profit | $85,034 | $75,594 | | Non-GAAP gross profit | $88,304 | $76,292 | | Non-GAAP gross margin | 78.1% | 77.9% | | GAAP income (loss) from operations | $29,674 | $(7,566) | | Non-GAAP income from operations | $23,614 | $6,936 | | Non-GAAP operating margin | 21% | 7% | Non-GAAP Net Income and EPS Reconciliation Non-GAAP net income for Q2 FY2026 was $16.3 million, with diluted EPS rising to $0.12 Non-GAAP Net Income and EPS Reconciliation (Three months ended July 31, in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | GAAP net income (loss) | $26,751 | $(4,057) | | Non-GAAP net income | $16,309 | $6,752 | | Non-GAAP net income as a % of revenue | 14.4% | 6.9% | | GAAP basic EPS | $0.22 | $(0.03) | | Non-GAAP basic EPS | $0.13 | $0.05 | | GAAP diluted EPS | $0.03 | $(0.03) | | Non-GAAP diluted EPS | $0.12 | $0.05 | - The projected tax rate for non-GAAP income tax provision was updated to 25.5% in the second quarter of fiscal 2026, compared to 23.5% at the start of the fiscal year and 25% in fiscal year 2025[21][56] Non-GAAP Net Income and EPS Reconciliation (Six months ended July 31, in thousands, except per share data) | Metric | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | GAAP net income (loss) | $27,521 | $(7,874) | | Non-GAAP net income | $32,834 | $13,104 | | Non-GAAP net income as a % of revenue | 14.8% | 6.8% | | GAAP basic EPS | $0.22 | $(0.06) | | Non-GAAP basic EPS | $0.26 | $0.10 | | GAAP diluted EPS | $0.05 | $(0.06) | | Non-GAAP diluted EPS | $0.25 | $0.10 | Constant Currency Revenue and Free Cash Flow Reconciliation Constant currency revenue grew 14%, and free cash flow improved to $7.8 million with a 7% margin Constant Currency Revenue and Free Cash Flow (Three months ended July 31, in thousands) | Metric | 2025 | 2024 | Growth Rates | | :------------------------------------------ | :----- | :----- | :----------- | | Revenue (GAAP) | $113,094 | $97,887 | 16% | | Revenue on a constant currency basis (Non-GAAP) | $111,875 | Not Applicable | 14% | | Net cash provided by (used in) operating activities | $8,407 | $(10,649) | Not Applicable | | Free cash flow | $7,834 | $(11,194) | Not Applicable | | Free cash flow margin | 7% | -11% | Not Applicable | Constant Currency Revenue (Six months ended July 31, in thousands) | Metric | 2025 | 2024 | Growth Rates | | :------------------------------------------ | :----- | :----- | :----------- | | Revenue (GAAP) | $222,577 | $193,877 | 15% | | Revenue on a constant currency basis (Non-GAAP) | $220,825 | Not Applicable | 14% | Operating Metrics & Supplemental Information This section defines key operating metrics and provides supplemental information on ARR, retention rates, and RPO Operating Metrics Definitions Yext defines ARR as annualized recurring contract amounts, and retention rates measure customer retention - Annual recurring revenue (ARR) for Direct customers is the annualized recurring amount of all contracts in the enterprise, mid-size, and small business customer base[30] - Dollar-based net retention rate (NRR) assesses the ability to retain customers and expand the ARR they generate, calculated by comparing ARR from a cohort of customers over a 12-month period, including expansion, contraction, and churn[37] - Dollar-based gross retention rate assesses the ability to retain customers, similar to NRR but excludes customer expansion[38] Annual Recurring Revenue (ARR) Total Annual Recurring Revenue (ARR) reached $444.4 million, a 15% year-over-year increase Annual Recurring Revenue (in thousands) | Metric | July 31, 2025 | July 31, 2024 | Variance (Dollars) | Percent | | :-------------------------- | :------------ | :------------ | :----------------- | :------ | | Direct Customers | $369,541 | $313,392 | $56,149 | 18% | | Third-Party Reseller Customers | $74,821 | $73,904 | $917 | 1% | | Total Annual Recurring Revenue | $444,362 | $387,296 | $57,066 | 15% | - ARR as of July 31, 2025, included an approximate $3.2 million positive impact from foreign currency exchange rates on a constant currency basis[11] Dollar-Based Net Retention Rate (NRR) Yext's total Dollar-Based Net Retention Rate (NRR) was 95%, an improvement from 91% in the prior year Dollar-Based Net Retention Rate | Metric | Jul. 31, 2025 | Jul. 31, 2024 | | :-------------------------- | :------------ | :------------ | | Direct Customers | 95% | 91% | | Third-Party Reseller Customers | 98% | 93% | | Total Customers | 95% | 91% | Dollar-Based Gross Retention Rate The total Dollar-Based Gross Retention Rate was 88%, an improvement from 84% in the prior year Dollar-Based Gross Retention Rate | Metric | Jul. 31, 2025 | Jul. 31, 2024 | | :-------------------------- | :------------ | :------------ | | Direct Customers | 87% | 83% | | Third-Party Reseller Customers | 88% | 88% | | Total Customers | 88% | 84% | Remaining Performance Obligations (RPO) Remaining Performance Obligations (RPO) totaled $445.0 million, with $407.2 million expected over 24 months - Remaining Performance Obligations (RPO) were $445.0 million as of July 31, 2025[12] - $407.2 million of RPO is expected to be recognized as revenue over the next twenty-four months[12]