Launches Answers on the Yext Platform, the Search Experience Cloud
Third Quarter Revenue grew by 30% Year-over-Year to $76.4 Million
Unearned Revenue Increased 32% Year-over-Year to $107.5 Million
Grew total number of mid-market and enterprise customers 46% Year-over-Year to 1,766
Issues Revenue Guidance of $79.0 Million – $81.0 Million for the Fourth Quarter Fiscal 2020
Updates Revenue Guidance for Fiscal 2020 to $296.5 Million – $298.5 Million
Yext, Inc. (NYSE: YEXT), the Search Experience Cloud company, today announced its results for the three months ended October 31, 2019, or the Company's third quarter of fiscal 2020.
"We successfully launched Yext Answers during the quarter, introducing the next chapter of our mission of putting the truth online. This modern site search platform, built upon our data knowledge graph containing over 259 million facts about our customers, expands the Yext market opportunity from one of businesses with physical locations to any business with a website," said Howard Lerman, Founder and Chief Executive Officer of Yext. "Brands across multiple industries have transformed their websites with Answers during its beta period, including BBVA USA, Three Mobile, and IHA."
"With the launch of Answers and the momentum generated at ONWARD19, Yext is well-positioned to address the increased demand from enterprise and mid-market customers across multiple industries. We continue to invest in our sales team, customer support and the build-out of our new Global Headquarters in New York to support Yext's long-term, future growth."
Third Quarter Fiscal 2020 Highlights:
Note to the reader: Yext adopted the revenue accounting standard ASC 606 for its fiscal year ended January 31, 2019 and the results for all periods presented below are reported on that basis.
- Revenue of $76.4 million, a 30% increase as compared to the $58.6 million reported in the third quarter fiscal 2019.
- Gross Profit of $56.0 million, a 28% increase as compared to the $43.7 million reported in the third quarter fiscal 2019. Gross margin of 73.3% as compared to 74.6% reported in third quarter fiscal 2019.
- Net Loss and Non-GAAP Net Loss:Net loss of $42.7 million increased 86% as compared to the $22.9 million net loss in third quarter fiscal 2019. The increased loss was driven primarily by higher operating expenses, due to an overall increase in headcount as well as the impact of new lease arrangements, including New York, NY.
Non-GAAP net loss of $21.6 million increased 116% as compared to the $10.0 million non-GAAP net loss in the third quarter fiscal 2019. The increase in non-GAAP net loss was primarily attributable to the higher operating expenses as described above.
- Net Loss Per Share and Non-GAAP Net Loss Per Share:Net loss per share of $0.38 in the third quarter of fiscal 2020 compared to a net loss per share of $0.23 in the third quarter of fiscal 2019.
Non-GAAP net loss per share of $0.19 in the third quarter of fiscal 2020 compared to a non-GAAP net loss per share of $0.10 in the third quarter of fiscal 2019.
Net loss per share and non-GAAP net loss per share were based on 113.5 million weighted-average basic shares outstanding for the third quarter of fiscal 2020 and 99.6 million weighted-average basic shares outstanding for the third quarter of fiscal 2019.
Balance Sheet: Cash and cash equivalents of $244.8 million as of October 31, 2019. Unearned revenue of $107.5 million as of October 31, 2019, increased $26.3 million from $81.2 million at October 31, 2018.
Remaining Performance Obligations ("RPO"): RPO as of October 31, 2019 was $251.8 million, with $237.5 million expected to be recognized over the next 24 months and the balance to be recognized thereafter. RPO does not include amounts under contracts subject to certain accounting exclusions.
Cash Flow: Net cash used by operating activities for the third quarter of fiscal 2020 was $31.8 million, as compared to net cash used by operating activities of $22.6 million in the same period of fiscal 2019.
Readers are encouraged to review the tables labeled "Reconciliation of GAAP to Non-GAAP Financial Measures" at the end of this release.
Recent Business Highlights:
Total number of mid-market and enterprise customers increased 46% year over year to 1,766.
Launched Answers, a revolutionary new search product that turns any brand's website into a powerful search engine capable of answering consumers' questions directly with brand verified answers.
Hosted its annual user conference, ONWARD19 with a record number of global attendees, increasing 48% to more than 1600 attendees.
Yext is also providing the following guidance for its fourth fiscal quarter ending January 31, 2020 and the fiscal year ending January 31, 2020.
- Fourth Quarter Fiscal 2020 Outlook:Revenue is projected to be $79.0 million to $81.0 million.
Non-GAAP net loss per share is projected to be $0.15 to $0.13 which assumes 115.2 million weighted-average basic shares outstanding.
- Full Year Fiscal 2020 Outlook:Revenue is projected to be $296.5 million to $298.5 million.
Non-GAAP net loss per share is projected to be $0.51 to $0.49, which assumes 111.8 million weighted-average basic shares outstanding.
Conference Call Information
Yext will host a conference call today at 5:00 P.M. Eastern Time (2:00 P.M. Pacific Time) to discuss its financial results with the investment community. A live webcast of the call will be available on the Yext Investor Relations website at http://investors.yext.com. A live dial-in is available domestically at (877) 883-0383 and internationally at (412) 902-6506, passcode 6808209.
A replay will be available domestically at (877) 344-7529 or internationally at (412) 317-0088, passcode 10136844, until midnight (ET) December 12, 2019.
The customer journey starts with a question, and every day consumers search for answers about brands. However, they are increasingly served false or misleading information from sources other than the brand. Yext (NYSE: YEXT), the Search Experience Cloud company, exists to help brands regain and maintain a direct relationship with their customers. With a mission to provide perfect answers everywhere, Yext puts businesses in control of their facts online by delivering brand verified answers straight from the source — wherever their customers are searching. Companies like Taco Bell and Jaguar-Land Rover, and businesses around the world use Yext to take back control of the customer journey, starting on their own website.
Yext has been named a Best Place to Work by Fortune and Great Place to Work®, as well as a Best Workplace for Women. Yext is headquartered in New York City with offices in Amsterdam, Berlin, Chicago, Dallas, Geneva, London, Miami, Milan, Paris, San Francisco, Shanghai, Tokyo, and the Washington, D.C. area.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This release includes forward-looking statements including, but not limited to, statements regarding our revenue, non-GAAP net loss and shares outstanding for our fourth fiscal quarter 2020 and full year fiscal 2020 in the paragraphs under "Financial Outlook" above, and other statements regarding our expectations regarding the growth of our company, our market opportunity and our industry. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "intend," "potential," "might," "would," "continue," or the negative of these terms or other comparable terminology. Actual events or results may differ from those expressed in these forward-looking statements, and these differences may be material and adverse.
We have based the forward-looking statements contained in this release primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, strategy, short- and long-term business operations, prospects, business strategy and financial needs. Our actual results could differ materially from those stated or implied in forward-looking statements due to a number of factors, including, but not limited to, our ability to renew existing customers and attract new customers; our ability to successfully expand and compete in new geographies and industry verticals; our ability to recruit and retain our sales force including in enterprise and midmarket; our ability to expand our publishing network; our ability to develop new product and platform offerings to expand our market opportunity, including with Yext Answers; our ability to release new products and updates that are adopted by our customers; our ability to manage our growth effectively; the number of options exercised by our employees and former employees; and the accuracy of the assumptions and estimates underlying our financial projections. For a detailed discussion of these and other risk factors, please refer to the risks detailed in our filings with the Securities and Exchange Commission, including, without limitation, our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K, which are available at http://investors.yext.com and on the SEC's website at https://www.sec.gov. Further information on potential risks that could affect actual results will be included in other filings we make with the SEC from time to time. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this release. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
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In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables include non-GAAP net loss, non-GAAP net loss per share and non-GAAP net loss margin. Non-GAAP net loss, non-GAAP net loss per share and non-GAAP net loss margin are financial measures that are not calculated in accordance with GAAP. We define these non-GAAP net loss financial measures as our GAAP net loss as adjusted to exclude the effects of stock-based compensation expenses. Non-GAAP net loss per share is defined as non-GAAP net loss on a per share basis. See "Reconciliation of GAAP to Non-GAAP Financial Measures" for a discussion of the applicable weighted-average shares outstanding. Non-GAAP net loss margin is defined as non-GAAP net loss divided by revenue. We believe these non-GAAP financial measures provide investors and other users of our financial information consistency and comparability with our past financial performance and facilitate period-to-period comparisons of our results of operations. With respect to non-GAAP net loss margin, we believe this metric is useful in evaluating our profitability relative to the amount of revenue generated, excluding the impact of stock-based compensation expense. We also believe these non-GAAP financial measures are useful in evaluating our operating performance compared to that of other companies in our industry, as these metrics eliminate the effects of stock-based compensation, which may vary for reasons unrelated to overall operating performance.
We use these non-GAAP financial measures in conjunction with traditional GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies and to communicate with our Board of Directors concerning our financial performance. Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish this or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, nor superior to or in isolation from, measures prepared in accordance with GAAP.
These non-GAAP financial measures may be limited in their usefulness because they do not present the full economic effect of our use of stock-based compensation. We compensate for these limitations by providing investors and other users of our financial information a reconciliation of non-GAAP net loss to net loss, non-GAAP net loss per share to net loss per share and non-GAAP net loss margin to net loss margin, the most closely related GAAP financial measures. However, we have not reconciled the non-GAAP guidance measures disclosed under "Financial Outlook" to their corresponding GAAP measures because certain reconciling items such as stock-based compensation and the corresponding provision for income taxes depend on factors such as the stock price at the time of award of future grants and thus cannot be reasonably predicted. Accordingly, reconciliations to the non-GAAP guidance measures is not available without unreasonable effort. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non-GAAP net loss and non-GAAP net loss per share in conjunction with net loss and net loss per share.
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