Why Yext (YEXT) Stock Is Up Today

Max Juang /
2024/03/07 11:43 am EST

What Happened:

Shares of online reputation and search platform Yext (NYSE:YEXT) jumped 24.2% in the pre-market session after the company reported fourth-quarter results with revenue exceeding expectations by a narrow margin, though EPS came in well ahead of Wall Street's estimates. Yext produced $14.8 million of adjusted EBITDA (vs estimates of $12.6 million), partly thanks to a huge year-on-year increase in its gross margin, which expanded from 74% to 78.6% thanks to the company's shift to a professional services strategy. This encouraging gross margin expansion trumped its underwhelming full-year revenue guidance, which was below expectations. A reason for the lower revenue guidance was the loss of a large customer during the quarter, but the market doesn't seem to care. Overall, it was a decent quarter for Yext.

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What is the market telling us:

Yext's shares are quite volatile and over the last year have had 18 moves greater than 5%. But moves this big are very rare even for Yext and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 9 months ago, when the stock gained 18.4% on the news that the company reported an impressive "beat and raise" quarter. First quarter results exceeded analysts' revenue estimates. Similarly, profitability metrics came in strong with gross margin, free cash flow, adjusted EBITDA, and earnings per share (EPS) all beating Consensus estimates. Guidance was also strong, with the revenue and adjusted EBITDA guidance for the next quarter exceeding Consensus estimates. Similarly, the full-year revenue and adjusted EBITDA guidance beat and were both raised. A slowdown in customer growth was the only minor negative we'd highlight. Regardless, it was a very strong quarter with solid results and impressive guidance that should increase investors' optimism.

Yext is up 7.8% since the beginning of the year, but at $6.27 per share it is still trading 54.1% below its 52-week high of $13.65 from June 2023. Investors who bought $1,000 worth of Yext's shares 5 years ago would now be looking at an investment worth $279.31.

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