Yext (NYSE:YEXT) Exceeds Q1 Expectations, Stock Soars

Kayode Omotosho /
2022/06/08 4:30 pm EDT
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Online reputation and search platform Yext (NYSE:YEXT) reported Q1 FY2023 results topping analyst expectations, with revenue up 7.4% year on year to $98.8 million. However, guidance for the next quarter was less impressive, coming in at $99.5 million at the midpoint, being 0.2% below analyst estimates. Yext made a GAAP loss of $25.8 million, down on its loss of $17.6 million, in the same quarter last year.

Is now the time to buy Yext? Access our full analysis of the earnings results here, it's free.

Yext (YEXT) Q1 FY2023 Highlights:

  • Revenue: $98.8 million vs analyst estimates of $96.7 million (2.16% beat)
  • EPS (non-GAAP): -$0.06 vs analyst estimates of -$0.07
  • Revenue guidance for Q2 2023 is $99.5 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed revenue guidance for the full year, at $401.3 million at the midpoint
  • Free cash flow of $16.2 million, down 42.1% from previous quarter
  • Customers: 2,830, up from 2,700 in previous quarter
  • Gross Margin (GAAP): 74.9%, down from 76.2% same quarter last year

“During the first quarter, we continued to work towards streamlining the business, improving efficiencies and re-architecting our go-to-market strategy,” said Mike Walrath, Yext’s Chief Executive Officer.

Founded in 2006 by Howard Lerman, Yext (NYSE:YEXT) offers software as a service that helps their clients manage and monitor their online listings and customer reviews across all relevant databases, from Google Maps to Alexa or Siri.

As the number of places that keep business listings (such as addresses, opening hours and contact details) increases, the task of keeping all listings up-to-date becomes more difficult and that drives demand for centralized solutions that update all touchpoints.

Sales Growth

As you can see below, Yext's revenue growth has been unremarkable over the last year, growing from quarterly revenue of $91.9 million, to $98.8 million.

Yext Total Revenue

Yext's quarterly revenue was only up 7.4% year on year, which would likely disappoint many shareholders. But the revenue actually decreased by $2.13 million in Q1, compared to $1.4 million increase in Q4 2022. However, the sales also similarly dropped a year ago and management is guiding for revenue to rebound in the coming quarter, which might hint at an emerging seasonal pattern.

Guidance for the next quarter indicates Yext is expecting revenue to grow 1.4% year on year to $99.5 million, slowing down from the 11.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 4.77% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Customer Growth

You can see below that Yext reported 2,830 customers at the end of the quarter, an increase of 130 on last quarter. That is a little better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

Yext Customers

Key Takeaways from Yext's Q1 Results

With a market capitalization of $693.8 million Yext is among smaller companies, but its more than $247.7 million in cash and the fact it is operating close to free cash flow break-even put it in a robust financial position to invest in growth.

We were very impressed by Yext’s very strong acceleration in customer growth this quarter. And we were also excited to see that it outperformed analysts' revenue expectations. On the other hand, it was unfortunate to see that Yext's revenue guidance for the full year missed analyst's expectations and the revenue growth was quite weak. Overall, this quarter's results were not the best we've seen from Yext. The company is up 5.27% on the results and currently trades at $5.69 per share.

Should you invest in Yext right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.