Yext (NYSE:YEXT) Reports Q1 In Line With Expectations, Stock Soars

Adam Hejl /
2023/06/06 4:13 pm EDT

Online reputation and search platform Yext (NYSE:YEXT) reported results in line with analyst expectations in Q1 FY2024 quarter, with revenue flat year on year at $99.5 million. Guidance for next quarter's revenue was $102 million at the midpoint, which is 1.86% above the analyst consensus. Yext made a GAAP loss of $412 thousand, improving on its loss of $25.8 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 FY2024 Highlights:

  • Revenue: $99.5 million vs analyst estimates of $98.6 million (0.92% beat)
  • EPS (non-GAAP): $0.08 vs analyst estimates of $0.05 ($0.03 beat)
  • Revenue guidance for Q2 2024 is $102 million at the midpoint, above analyst estimates of $100.1 million
  • The company reconfirmed revenue guidance for the full year, at $405.5 million at the midpoint (beat)
  • Free cash flow of $25.8 million, down 28.2% from previous quarter
  • Customers: 2,970, up from 2,960 in previous quarter
  • Gross Margin (GAAP): 78.5%, up from 75% 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.

Sales Growth

As you can see below, Yext's revenue growth has been unimpressive over the last two years, growing from quarterly revenue of $92 million in Q1 FY2022, to $99.5 million.

Yext Total Revenue

Yext's quarterly revenue was only up 0.66% year on year, which might disappoint some shareholders. But the revenue actually decreased by $2.45 million in Q1, compared to $2.62 million increase in Q4 2023. However, Yext's sales do seem to have a seasonal pattern to them, and considering management is guiding for revenue to rebound in the coming quarter we wouldn't be too concerned.

Guidance for the next quarter indicates Yext is expecting revenue to grow 1.12% year on year to $102 million, slowing down from the 2.8% 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 1.65% 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 2,970 customers at the end of the quarter, an increase of 10 on last quarter. That is a little slower customer growth than what we are used to seeing lately, suggesting that the customer acquisition momentum is slowing down.

Yext Customers

Key Takeaways from Yext's Q1 Results

With a market capitalization of $1.15 billion Yext is among smaller companies, but its more than $216.9 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

We were very impressed by the strong improvements in Yext’s gross margin this quarter. And we were also glad that the revenue and adjusted EBITDA guidance for the next quarter exceeded analysts' expectations. Full year guidance for revenue and adjusted EBITDA was ahead as well, adding to the quality of the quarter. Lastly on the positive side, free cash flow beat. On the other hand, the slowdown in customer growth was a slight negative. Overall, this quarter's results were not perfect but certainly good overall. The company is up 8.24% on the results and currently trades at $10.38 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.