Yext(US:YEXT)2023-03-08 04:31Financial Data and Key Metrics Changes - For Q4, the company reported revenue of $101.9 million and non-GAAP net income per share of $0.05, both exceeding the high end of guidance ranges [9][37] - Full year revenue reached $400.9 million, up from $390.6 million in the previous fiscal year, representing a growth of approximately 3% on an as-reported basis [37][70] - Annual recurring revenue (ARR) at the end of Q4 was $400.4 million, reflecting a 4% year-over-year increase in constant currency and a 3% increase on an as-reported basis [38][79] - The company achieved a gross retention rate in the high-80s for Q4, an improvement from the mid-80s in Q3 [40][72] Business Line Data and Key Metrics Changes - The services business accounted for approximately 9% of total revenue, with plans to transition some services to systems integrators and partners, which is expected to positively impact gross margins [10][82] - Direct customers represented 82% of total ARR, with direct ARR totaling $327 million, a 6% year-over-year increase in constant currency [79] Market Data and Key Metrics Changes - The company experienced a year-over-year impact of approximately $4.8 million on ARR due to foreign exchange fluctuations [38] - Third-party resellers generated ARR of $73.3 million, a decrease of 6% year-over-year in constant currency [71] Company Strategy and Development Direction - The company is focused on enhancing customer satisfaction, operational efficiency, and product innovation to drive long-term growth potential [6][8] - A shift towards a partner-centric go-to-market strategy is being implemented, particularly in Japan, while reducing direct sales efforts to SMBs [53][56] - The company is investing in automation to reduce the need for services and create more value for customers [21][24] Management's Comments on Operating Environment and Future Outlook - Management anticipates revenue headwinds from the shift towards systems integrators and services partners, which may modestly impact revenue and renewals [43][56] - Despite these challenges, the company expects to operate more efficiently and profitably in the upcoming fiscal year, with gross margin improvements and reduced operating expenses as a percentage of revenue [43][44] Other Important Information - The company repurchased 13.8 million shares in fiscal year 2023, reducing share count by approximately 10% [51] - The upcoming Investor Day on April 4 will provide further insights into the company's financial objectives and strategies [26][69] Q&A Session Summary Question: What does the full year guide contemplate regarding the listings business? - The company does not forecast based on products but acknowledges headwinds from strategic decisions made in Q4, impacting growth by low-single-digit percentage points [87] Question: Should we anticipate a significant increase in gross margins after the changes made in the services side? - Yes, the actions taken in Q4 are expected to result in a step function increase in gross margins, with Q1 expected to be in the middle of the 75% to 80% range [88] Question: How does Yext Chat integrate with existing knowledge bases compared to other chatbots? - Yext Chat delivers an enterprise experience by ensuring that the information used is accurate and derived from the knowledge base, avoiding the pitfalls of generative models that may produce inaccurate information [94] Question: What is the timeline for seeing financial contributions from new products like Yext Chat and Content Generation? - Content Generation will be part of the spring release, while Yext Chat is currently in beta, with broader availability expected in the latter half of the year [119][121] Question: What strategies are the new C-suite executives focusing on? - The new executives are focused on improving the go-to-market strategy, which may take time to show quantitative impacts due to the nature of sales cycles [124]