• Gross ARR Retention: Increased to the high-80s.
• Net Retention Rate: Increased across both direct and reseller channels.
• EBITDA Margins: Exceeded 20%.
• EBITDA Outlook for Fiscal Year '26: Projected to be over $100 million.

Release Date: March 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Yext Inc (NYSE:YEXT) has successfully integrated Hearsay, generating expected go-to-market and cost synergies.
• Product innovation is accelerating, with the launch of Yext Scout receiving enthusiastic customer responses.
• Gross and net retention rates are increasing, with gross ARR retention in the high-80s.
• EBITDA margins are over 20%, with a strong outlook for over $100 million in EBITDA for fiscal year 2026.
• The company is seeing momentum in key verticals like healthcare and financial services, driven by industry-specific factors.

Negative Points

• The macroeconomic environment remains unchanged, with spending scrutiny persisting.
• Sequential ARR decline was noted, partly due to FX impacts and downgrades rather than logo churn.
• The company is still facing challenges related to store closures and reduced number of licenses.
• Despite product developments, the demand environment remains challenging, with no significant tailwinds.
• Yext Inc (NYSE:YEXT) is not providing a full-year revenue guide, reflecting uncertainty in the revenue picture.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with YEXT.

Q: Can you provide an update on the outlook for fiscal 2026, particularly regarding any changes in market conditions or optimism levels? A: Michael Walrath, CEO, stated that the market conditions have stabilized and normalized, with headwinds not worsening. The company sees momentum continuing, driven by the urgency around AI experiences and AI search. Despite ongoing cost optimizations and challenges, there is a sense of building momentum, and conditions are not becoming more difficult.

Q: Are there specific industry verticals where Yext expects to see growth in fiscal 2026, given the current macroeconomic environment? A: Michael Walrath highlighted momentum in healthcare and financial services, particularly due to regulatory pressures in the latter. He noted that businesses with a local presence are prioritizing data optimization to navigate a fragmented search landscape. Yext anticipates ARR growth this year, despite macroeconomic challenges.

Q: What are Yext's key investment priorities for fiscal 2026, and how do they plan to manage expenses to achieve over $100 million in EBITDA? A: Michael Walrath explained that Yext will manage expenses conservatively until growth develops. The company is expanding ARR disclosures to provide a clearer revenue picture. They plan to balance accelerating growth with R&D investments or allowing more EBITDA to flow to the bottom line, depending on growth rates.

Q: How does the recent acquisition of Places Scout and the launch of Yext Scout fit into the competitive landscape of search fragmentation? A: Michael Walrath described Places Scout as a leader in gathering SEO rank data, which complements Yext's efforts to address AI-driven search experiences. The acquisition enhances Yext's ability to provide insights and automate actions for customers, helping them navigate a complex search environment. The customer response to Yext Scout has been overwhelmingly positive.

Q: How is Yext approaching capital deployment, considering recent acquisitions and stock buybacks? A: Michael Walrath stated that Yext evaluates M&A opportunities against stock buybacks, given the attractive stock value. The company maintains a healthy cash position, allowing flexibility in capital allocation, whether for organic growth, acquisitions, or share repurchases. The increased buyback authorization reflects confidence in the stock's value.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.