Yext (NYSE:YEXT) Surprises With Q3 Sales, Stock Soars

Kayode Omotosho /
2021/12/02 4:34 pm EST
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Online reputation and search platform Yext (NYSE:YEXT) reported Q3 FY2022 results beating Wall St's expectations, with revenue up 11.7% year on year to $99.5 million. Guidance for next quarter's revenue was $101 million at the midpoint, which is 1.78% above the analyst consensus. Yext made a GAAP loss of $24.9 million, down on its loss of $22 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) Q3 FY2022 Highlights:

  • Revenue: $99.5 million vs analyst estimates of $98.2 million (1.34% beat)
  • EPS (non-GAAP): -$0.04 vs analyst estimates of -$0.07
  • Revenue guidance for Q4 2022 is $101 million at the midpoint, above analyst estimates of $99.2 million
  • Free cash flow was negative $11.5 million, compared to negative free cash flow of $35.7 million in previous quarter
  • Customers: 2,700, up from 2,600 in previous quarter
  • Gross Margin (GAAP): 74.6%, down from 75.7% same quarter last year

"We are on the road to recovery," said Howard Lerman, Founder and CEO of Yext.

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 one, centralized solution.

Sales Growth

As you can see below, Yext's revenue growth has been slower over the last year, growing from quarterly revenue of $89 million, to $99.5 million.

Yext Total Revenue

This quarter, Yext's quarterly revenue was once again up 11.7% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $1.4 million in Q3, compared to $6.13 million in Q2 2022. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.

Analysts covering the company are expecting the revenues to grow 12% over the next twelve months, although estimates are likely to change post earnings.

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 400% since the IPO in December. You can find it on our platform for free.

Customer Growth

You can see below that Yext reported 2,700 customers at the end of the quarter, an increase of 100 on last quarter. That's in line with the customer growth we have seen over the last couple of quarters, suggesting that the company can maintain its current sales momentum.

Yext Customers

Key Takeaways from Yext's Q3 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Yext’s balance sheet, but we note that with a market capitalization of $1.16 billion and more than $229.5 million in cash, the company has the capacity to continue to prioritise growth over profitability.

It was good to see Yext improve their gross margin this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. On the other hand, revenue growth is overall a bit slower these days and . Zooming out, we think this was still a decent quarter, showing the company is staying on target. The company is up 7.63% on the results and currently trades at $10.15 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.