Online reputation and search platform Yext (NYSE:YEXT) missed analyst expectations in Q4 FY2022 quarter, with revenue up 9.47% year on year to $100.9 million. Guidance for the next quarter also missed analyst expectations with revenues guided to $96.8 million at the midpoint, or 6.73% below analyst estimates. Yext made a GAAP loss of $23.1 million, down on its loss of $18.3 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) Q4 FY2022 Highlights:
- Revenue: $100.9 million vs analyst estimates of $101 million (small miss)
- EPS (non-GAAP): -$0.03 vs analyst estimates of -$0.08
- Revenue guidance for Q1 2023 is $96.8 million at the midpoint, below analyst estimates of $103.7 million
- Management's revenue guidance for upcoming financial year 2023 is $405.3 million at the midpoint, missing analyst estimates by 8.86% and predicting 3.76% growth (vs 10.1% in FY2022)
- Free cash flow of $28 million, up from negative free cash flow of $11.5 million in previous quarter
- Customers: 2,700, same as in previous quarter
- Gross Margin (GAAP): 75.6%, down from 76.5% same quarter last year
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.
As you can see below, Yext's revenue growth has been unremarkable over the last year, growing from quarterly revenue of $92.1 million, to $100.9 million.
Yext's quarterly revenue was only up 9.47% year on year, which would likely disappoint many shareholders. We can see that revenue increased by $1.4 million in Q4, which was roughly the same as in Q3 2022.
Guidance for the next quarter indicates Yext is expecting revenue to grow 5.22% year on year to $96.8 million, slowing down from the 7.78% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $405.3 million at the midpoint, growing 3.76% compared to 10.1% increase in FY2022.
There are others doing even better than Yext. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 150% since the IPO last December. You can find it on our platform for free.
You can see below that Yext reported 2,700 customers at the end of the quarter, flat on last quarter. That is slower customer growth than what we are used to seeing lately, suggesting that the customer acquisition momentum is slowing a little bit.
Key Takeaways from Yext's Q4 Results
With a market capitalization of $778.2 million Yext is among smaller companies, but its more than $261.2 million in cash and positive free cash flow over the last twelve months give us confidence that Yext has the resources it needs to pursue a growth business strategy.
It was nice that Yext improved their gross margin, even if just slightly. That feature of these results stood out as a positive. On the other hand, the revenue guidance for the full year missed analyst's expectations and it indicates quite a significant slowdown in growth. Overall, this quarter's results were not the best we've seen from Yext. The company is down 15.6% on the results and currently trades at $5 per share.
Yext may have had a tough quarter, but does that actually create an opportunity to invest 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.
One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.
The author has no position in any of the stocks mentioned.