Yext(US:YEXT)2022-06-09 02:46Financial Data and Key Metrics Changes - First quarter revenue was $98.8 million, which is a 7% year-over-year increase and $1.5 million above the high end of guidance [10][49] - Non-GAAP net loss per share was $0.06, which is $0.01 better than the high end of guidance [11][57] - Annual recurring revenue (ARR) at the end of Q1 was $387 million, up 5% year-over-year [49] - Gross margin for Q1 was 76.4%, down from 77.8% in the year-ago quarter [55] - Q1 net loss was $7.8 million compared to a net loss of $3 million in the year-ago quarter [57] Business Line Data and Key Metrics Changes - Direct customers represent 80% of total ARR, totaling $310 million, which is a 7% year-over-year growth [54] - Third-party reseller ARR totaled $77 million at Q1, representing a decline of 3% over the prior year [54] - Customer count, excluding small business customers and third-party resellers, increased 11% year-over-year to 2,830 [52] Market Data and Key Metrics Changes - The company experienced a 1% negative impact from foreign exchange (FX) on Q1 revenue and a 2% negative impact on ARR [50] - More than 95% of revenue in the quarter was recurring in nature, with onetime services representing about 2% of total revenue [24] Company Strategy and Development Direction - The company is focused on streamlining operations, improving efficiency, and re-architecting its go-to-market strategy [9][18] - A renewed commitment to customer satisfaction is central to the company's strategy, with a focus on reducing customer churn and contract downgrades [13][15] - The company plans to provide ARR metrics broken out by direct and third-party reseller customers moving forward [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to operate efficiently despite economic uncertainty, inflation, and FX headwinds [11][27] - The company is taking a long-term view of customer relationships, prioritizing future opportunities over near-term revenue [16] - Management acknowledged challenges with customer satisfaction and emphasized the need for improved service to retain customers [66][68] Other Important Information - The company announced the departure of David Rudnitsky, the Chief Revenue Officer, and is in the process of searching for a global CRO [17] - The company authorized a $100 million share repurchase program and repurchased $31 million through the end of the quarter [58] Q&A Session Summary Question: Impact of customer downgrades and churn - Management noted that gross retention slipped into the low 80s, primarily driven by a single customer churn due to service disruptions [66][67] Question: Demand post-COVID - Management indicated that they are seeing a return to normalcy post-COVID, with a variety of deals coming through, although not at the desired volume yet [71] Question: Sales and marketing headcount reduction - Management explained that the impact of headcount reduction on expenses will be more pronounced in the second half of the year, with expectations for improved efficiency [78] Question: Customer success motion - Management highlighted efforts to standardize customer success initiatives and improve coordination across teams to enhance customer experience [81][82] Question: Renewal cycle and churn prevention - Management expressed caution regarding potential churn but emphasized the importance of providing a unified customer experience to retain clients [92][93] Question: Macro impacts on demand - Management stated that they are not currently seeing a slowdown in demand due to macroeconomic factors and believe software businesses tend to perform well in recessionary environments [114]