Summary
Yext reported revenue of $100.9 million for the second quarter of fiscal 2023, up 3% from $98.1 million in the prior-year quarter. The top line included a negative impact of approximately $2.8 million from foreign currency exchange rates on a constant currency basis. Revenue growth on a constant currency basis was 6%. Gross profit rose to $73.8 million from $71.5 million, and gross margin was 73.2%, compared with 72.9% in the prior-year quarter.
The company remained unprofitable on a GAAP basis. Operating loss narrowed to $19.5 million from $26.4 million, and operating margin was negative 19.4%, compared with negative 26.9% a year earlier. Net loss narrowed to $20.0 million from $27.6 million, and diluted net loss per share narrowed to $0.16 from $0.22. Non-GAAP net loss was $3.9 million, compared with $7.2 million in the prior-year quarter, and non-GAAP net loss per share was $0.03, compared with $0.06.
Customer count ended the quarter at over 2,870, up 8% year over year. Annual recurring revenue was $387 million, up 2% from $378 million a year earlier, and included an approximate $10.8 million negative impact from foreign currency exchange rates on a constant currency basis. Remaining performance obligations were $326.6 million as of July 31, 2022, down 4.4% from $341.6 million a year earlier. Deferred revenue, current portion, was $165.9 million, flat compared with $165.4 million as of July 31, 2021.
Cash flow remained under pressure. Net cash used in operating activities was $25.2 million for the quarter, up from $32.6 million used in the prior-year quarter. For the first six months of fiscal 2023, operating cash flow was negative $7.3 million, down from positive $2.4 million in the prior-year period. Capital expenditures were $2.2 million in the quarter, down 28.0% from $3.1 million a year earlier, and $3.9 million year to date, down 63.3% from $10.6 million. Year-to-date revenue was $199.7 million, up 5.0% from $190.1 million. The year-to-date net loss widened to $45.8 million from $45.2 million, while diluted net loss per share was $0.36, flat with the prior-year period.
Management provided guidance for the third quarter of fiscal 2023 and updated guidance for the full fiscal year 2023. The third quarter revenue outlook assumes a $1.0 million negative impact from recent foreign currency exchange rates. Non-GAAP earnings per share for the third quarter is projected at $(0.01) to $0.01, assuming 124.4 million weighted-average basic shares. For the full fiscal year, the revenue outlook includes an $8.0 million negative impact from foreign currency exchange rates. Non-GAAP net loss per share for the full year is projected at $0.08 to $0.06, assuming 126.3 million weighted-average basic shares.
Risks include the ongoing COVID-19 pandemic and its variants, which continue to disrupt business operations and could affect customer demand, sales cycles, and retention. The company also cites its ability to renew and expand subscriptions with existing customers, especially enterprise customers, and to attract new customers generally. Other risks include competition, expansion into new geographies and industry verticals, scaling the sales force, developing new products, and weakened or changing global economic conditions. Yext repurchased 10,224,095 shares at an average price of $5.77 per share for a total cost of $58.9 million under its share repurchase program, leaving approximately $41.1 million available. The company was in compliance with all debt covenants as of July 31, 2022, and the $50.0 million revolving loan facility had $35.9 million available and $14.1 million in letters of credit allocated as security in connection with office space.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $100.9M | $98.8M | +2.1% | $98.1M | +2.8% |
| Gross profit | $73.8M | $74.1M | -0.4% | $71.5M | +3.2% |
| Gross margin | 73.2% | 75.0% | -1.8 pp | 72.9% | +0.3 pp |
| Research & development | $18.8M | $17.3M | +8.8% | $18.5M | +1.7% |
| Sales & marketing | $54.1M | $60.8M | -11.0% | $58.6M | -7.6% |
| General & administrative | $20.4M | $21.5M | -5.2% | $20.8M | -2.2% |
| Total operating expenses | $93.3M | $99.6M | -6.3% | $97.9M | -4.7% |
| Operating income (loss) | -$19.5M | -$25.5M | +23.5% | -$26.4M | +26.1% |
| Operating margin | -19.4% | -25.8% | +6.5 pp | -26.9% | +7.6 pp |
| Net income (loss) | -$20.0M | -$25.8M | +22.6% | -$27.6M | +27.5% |
| Net margin | -19.8% | -26.1% | +6.3 pp | -28.1% | +8.3 pp |
| Diluted EPS | -$0.16 | -$0.20 | +$0.04 | -$0.22 | +$0.06 |
Risks
Yext's revenue growth rate has slowed from 31% between FY2019 and FY2020, to 19%, to 10%, and to 5% from the six months ended July 31, 2021 to the six months ended July 31, 2022, and management expects slower growth in the coming year. Reported revenue was up 2.8% in FY2023 Q2 and up 5.0% year to date, so further deceleration could pressure the business and stock price.
Yext generated a net loss of $20.0 million for the quarter ended July 31, 2022 and had an accumulated deficit of $656.4 million as of July 31, 2022. The company said it may continue to experience operating losses and may not achieve or sustain profitability.
Inflation, reduced technology spending, European economic weakness, and Russia's invasion of Ukraine may harm demand, lengthen sales cycles, and reduce spending. Revenue for FY2023 Q2 included a negative foreign currency impact of approximately $2.8 million, and six-month revenue had a negative foreign currency impact of approximately $4.2 million on a constant currency basis.
Yext experienced significant leadership turnover: CEO Howard Lerman and CFO Steven Cakebread resigned in March 2022, and President and Chief Revenue Officer David Rudnitsky resigned in June 2022. Management said these changes and related disruption have had and will continue to have near-term effects on business, growth, and profitability.
Revenue growth is substantially reliant on the sales force, and Yext has historically had difficulty recruiting and retaining sufficient sales personnel, a difficulty heightened during the COVID-19 pandemic. It may also reduce sales headcount in the near term as it realigns go-to-market, which could impede growth.
Net cash used in operating activities was $7.3 million for the six months ended July 31, 2022, compared with net cash provided by operating activities of $2.4 million for the six months ended July 31, 2021. The year-to-date operating cash flow decline was $9.75 million, or 398.3%.
Growth depends on strategic relationships with approximately 200 Knowledge Network application providers, including Google, Amazon Alexa, Apple Maps, and others. Losing or impairing access to key providers could reduce the value of the platform and lead to customer losses.
The market is competitive and rapidly evolving, and Yext faces established enterprise search competitors and other vendors with greater resources, name recognition, and customer bases. If competitors offer lower prices or their products become more accepted, Yext's revenue growth could be adversely affected.
Yext sells to enterprises with complex operating environments, leading to long and unpredictable sales cycles, and COVID-19 has made sales cycles more complex. Delays in or failures to complete sales could cause operating results to vary by period and slow revenue growth.
Third-party reseller customers comprise a significant portion of revenue, and Yext does not control their efforts. Lower demand from resellers has resulted and may continue to result in non-renewals, fewer licenses, renegotiated contracts, and extended payment terms, effects that would not be fully reflected until future periods.
Yext recently began offering capacity-based pricing for Pages and Answers, and there is no assurance this new pricing and distribution model will be successful. Changes in pricing could reduce revenue, gross margin, profitability, or cash flow.
The COVID-19 pandemic has significantly disrupted operations and is expected to continue to have an adverse effect on Yext's business, sales activities, and customer spending. The majority of employees are still working remotely, and the uncertain duration may continue to negatively affect sales efforts and revenue growth rates.
As of July 31, 2022, Yext had repurchased 10,224,095 shares for $58.9 million under a $100.0 million share repurchase program, leaving approximately $41.1 million available. Repurchases diminish cash reserves and could impact future strategic opportunities.
SaaS KPIs
All quarters →Customer Count
Remaining Performance Obligations (RPO)
Non-GAAP Gross Margin
Total Annual Recurring Revenue
Annual Recurring Revenue (ARR)
Annual Recurring Revenue - Direct Customers
Annual Recurring Revenue - Third-Party Reseller Customers
Summary, forecast, risks and KPIs are extracted from Yext, Inc.'s SEC filings for Q2 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.