Yext(US:YEXT)2025-12-08 21:11Financial Performance - Revenue for the three months ended October 31, 2025, was $111,998, a decrease of 1.7% compared to $113,989 for the same period in 2024[19]. - Gross profit for the three months ended October 31, 2025, was $82,795, down from $87,742 in the prior year, reflecting a gross margin of 73.9%[19]. - Operating expenses decreased to $75,015 for the three months ended October 31, 2025, compared to $98,110 in the same period of 2024, a reduction of 23.5%[19]. - Net income for the three months ended October 31, 2025, was $6,136, compared to a net loss of $12,799 for the same period in 2024[19]. - Total revenue for the nine months ended October 31, 2025, was $334.6 million, representing an increase of 8.6% from $307.9 million in the same period of 2024[49]. - For the nine months ended October 31, 2025, Yext reported a net income of $33.7 million, compared to a net loss of $20.7 million for the same period in 2024[31]. - Revenue from North America for the nine months ended October 31, 2025, was $270.6 million, up 10.9% from $244.2 million in 2024[49]. - The company reported a net income of $6.1 million for the three months ended October 31, 2025, compared to a net loss of $12.8 million for the same period in 2024, resulting in a basic net income per share of $0.05[131]. - Non-GAAP net income for the three months ended October 31, 2025, was $17.495 million, an increase from $15.615 million in the same period of 2024[194]. - Adjusted EBITDA for the three months ended October 31, 2025, was $27.220 million, compared to $23.094 million in the same period of 2024, reflecting a growth of 18.4%[194]. Assets and Liabilities - Total assets as of October 31, 2025, were $555,773, down from $610,078 as of January 31, 2025, a decrease of 8.9%[17]. - Total liabilities decreased to $400,601 as of October 31, 2025, from $456,885 as of January 31, 2025, a reduction of 12.3%[17]. - Cash and cash equivalents increased to $139,916 as of October 31, 2025, compared to $123,133 as of January 31, 2025, an increase of 13.6%[17]. - The company’s accumulated deficit improved to $(673,463) as of October 31, 2025, from $(707,120) as of January 31, 2025[17]. - The company’s total stockholders' equity increased to $155,172 as of October 31, 2025, from $153,193 as of January 31, 2025[17]. - As of October 31, 2025, the Company's total marketable securities amounted to $88.2 million, with money market funds comprising $28.4 million[76]. - Accounts payable and accrued expenses totaled $39.030 million as of October 31, 2025, a decrease from $70.022 million as of January 31, 2025[97]. Cash Flow and Financing - Cash provided by operating activities for the nine months ended October 31, 2025, was $26.3 million, compared to $11.9 million in 2024[31]. - Free cash flow for the three months ended October 31, 2025, was $(20.335) million, compared to $(16.372) million in the same period of 2024[199]. - The company reported net cash used in investing activities of $(20,451) thousand for the nine months ended October 31, 2025, compared to $(91,176) thousand in the same period of 2024[214]. - Net cash provided by financing activities was $10.1 million for the nine months ended October 31, 2025, compared to $(13,213) thousand in the same period of 2024[214]. - The company entered into a May 2025 Credit Agreement providing for a senior secured initial term loan facility of up to $100 million, maturing on May 15, 2030[110]. - As of October 31, 2025, the Company's principal debt obligation was $100 million, with a net carrying amount of $98.167 million after accounting for unamortized costs[117]. - The company incurred original issue discount costs of $1.0 million and debt issuance costs of $0.7 million in connection with the May 2025 Credit Agreement[211]. - The May 2025 Credit Agreement requires the company to maintain minimum qualified cash of at least $35.0 million at all times[210]. - As of October 31, 2025, the company was in compliance with all debt covenants[212]. Acquisitions - The company completed the acquisition of Hearsay on August 1, 2024, to enhance its digital presence platform capabilities[57]. - The total consideration transferred for the acquisition of Hearsay amounted to $180.7 million, which includes cash consideration of $132.5 million and contingent consideration of $39.8 million[58][60][61]. - The contingent consideration is tied to an earnout arrangement that could require payments of up to $75.0 million based on achieving specific Annual Recurring Revenue (ARR) milestones by September 2026[61]. - The Company recognized acquisition-related costs totaling $11.2 million, which were expensed as incurred and included $8.8 million related to the incentive pool for Hearsay founders and early employees[65]. - The purchase price allocation for the acquisition of Hearsay included identifiable intangible assets valued at $101.9 million, with customer relationships valued at $76.2 million and technology at $24.8 million[66][70]. - The acquisition of Places Scout was completed for a purchase price of $20.3 million, with $5.6 million allocated to technology and $0.9 million to customer relationships[73][74]. - The Company issued approximately 2.1 million replacement equity awards with a fair value of $11.8 million as part of the Hearsay acquisition, with $7.8 million allocated to pre-acquisition services[62]. - The company completed the acquisition of KabanaSoft for $20.3 million, enhancing its competitive intelligence and AI capabilities[142]. Revenue Recognition and Backlog - As of October 31, 2025, unearned revenue was $154.6 million, indicating a strong backlog of future revenue[54]. - The company had $415.6 million in remaining performance obligations as of October 31, 2025, with $377.1 million expected to be recognized as revenue over the next 24 months[56]. - Revenue from direct customers was $93.3 million for the three months ended October 31, 2025, down $2.2 million or 2% from $95.5 million in 2024, primarily due to customer attrition[166]. - Revenue from direct customers for the nine months ended October 31, 2025, was $279.2 million, an increase of $27.1 million or 11% from $252.2 million in 2024[176]. - Total Annual Recurring Revenue (ARR) decreased by 1% to $444.36 million in 2025 from $448.65 million in 2024[151]. Stock-Based Compensation - Stock-based compensation expense for the nine months ended October 31, 2025, was $38.0 million, slightly up from $37.1 million in 2024[31]. - Total stock-based compensation expense for the three months ended October 31, 2025, was $12.338 million, a decrease of 2.8% from $12.693 million in the same period of 2024[99]. - For the nine months ended October 31, 2025, total stock-based compensation expense increased to $37.959 million, up 2.3% from $37.091 million in 2024[99]. - The balance of restricted stock and restricted stock units (RSUs) as of October 31, 2025, was 8,857,312, with a weighted-average grant date fair value of $7.30[102]. - The Company granted 1,025,000 performance-based restricted stock units (PSUs) during the nine months ended October 31, 2025, which vest based on achieving specific metrics[103]. Tax and Compliance - The Company recorded a provision for income taxes of $0.5 million for the three months ended October 31, 2025, compared to $3.0 million for the same period in 2024[120]. - The effective tax rate differs from the U.S. federal statutory tax rate primarily due to full valuation allowances related to net deferred tax assets[121]. - The projected tax rate for non-GAAP income was updated to 25.5% for fiscal year 2026, compared to 25% in fiscal year 2025[187]. Market Conditions and Strategic Initiatives - Macroeconomic conditions, including inflation and foreign currency fluctuations, may adversely impact the company's financial condition and operating results in future periods[139]. - Michael Walrath, CEO of Yext, proposed to acquire all outstanding shares at $9.00 per share, with no decision made yet by the Board[141]. - The company operates as a single segment, with consolidated net income (loss) used to measure segment profit or loss[132]. - The company’s digital presence platform, known as the Answers Platform, is utilized by over 200 service and application providers, enhancing its market reach[135].