Yext (YEXT) Stock Trades Down, Here Is Why

Max Juang /
2023/09/07 11:50 am EDT

What Happened:

Shares of online reputation and search platform Yext (NYSE:YEXT) fell 14.2% in the morning session after the company reported second quarter results that narrowly beat analysts' revenue expectations. Earnings per share (EPS) was also in line. 

Looking ahead, Yext's revenue guidance for next quarter missed analysts' expectations. Investors were likely hoping for a better outlook as management called out an uncertain macroeconomic environment, budget scrutiny and prolonged closed processes with multiple decision makers. On the bright side, the company increased its share repurchase program by $50 million. Overall, this was a mediocre quarter.

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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 three months ago, when the company 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 6.5% since the beginning of the year, but at $6.74 per share it is still trading 50.6% below its 52-week high of $13.65 from June 2023. Investors who bought $1,000 worth of Yext's shares five years ago would now be looking at an investment worth $251.07.

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