Summary
Yext reported revenue of $102.6 million for the second quarter of fiscal 2024, up 1.7% from $100.9 million a year earlier. Growth was 1% on a constant currency basis, so foreign exchange gave the reported top line a small lift. Gross profit of $80.2 million rose 8.7%, and gross margin expanded to 78.2% from 73.2%. The cost base did the heavy lifting. Cost of revenue fell on lower headcount and lower stock-based compensation. Subscriptions and associated support remained the bulk of revenue, with professional services making up the rest.
Profitability improved sharply further down the income statement. Operating loss narrowed to $4.2 million from $19.5 million in the prior-year quarter, and operating margin improved to -4.1% from -19.4%. Net loss narrowed to $3.4 million, or $0.03 per diluted share, from $20.0 million, or $0.16 per share. On a non-GAAP basis the company was profitable, with net income of $8.1 million against a prior-year non-GAAP net loss of $3.9 million. Adjusted EBITDA reached $11.8 million, up from $0.9 million a year earlier. Through the first six months of fiscal 2024, revenue was $202.1 million, up 1.2%, gross margin was 78.4%, net loss was $3.8 million, and operating loss narrowed to $5.5 million from $45.0 million.
The recurring revenue base is where the story gets more complicated. Total ARR of $398 million rose 3% year over year, or 2% in constant currency. Direct customer ARR increased 5% to $327.2 million, but third-party reseller ARR declined 6% to $70.5 million, matching the revenue attrition in that channel. Customer count was approximately 2,980 as of July 31, 2023, and the dollar-based net retention rate for total customers was 97%. Contracted backlog grew much faster than reported revenue. RPO reached $424.5 million, up 30.0% from a year earlier, and the company expects $370.7 million of that to be recognized over the next 24 months. Deferred revenue was $169.5 million, up 2.2%.
Cash generation was lumpy but improved. Operating cash flow was a use of $7.0 million for the quarter, smaller than the $25.2 million used in the prior-year quarter, and the first six months produced $19.7 million of operating cash flow against a $7.3 million use a year earlier. Capital expenditures fell to $0.6 million from $2.2 million. Operating cash flow can swing widely between quarters because of the timing of billings and collections, which the filing flags directly. Yext's board added $50.0 million to the share repurchase program in September 2023, while $11.6 million remained available at July 31, 2023 under the original $100.0 million authorization.
Management's guidance points to a steady near term. Adjusted EBITDA is projected at $11.5 million to $12.5 million and non-GAAP net income per share at $0.06 to $0.07 for the third quarter of fiscal 2024. For the full fiscal year 2024, the company projected Adjusted EBITDA of $50.0 million to $52.0 million and non-GAAP net income per share of $0.29 to $0.30. Revenue guidance was also provided for both the third quarter and the full fiscal year.
The filing's risk list is familiar. Macroeconomic uncertainty could lead customers to delay technology spending, renegotiate contracts or drop renewals. Foreign currency swings and inflation cut both ways, the reseller channel is already shrinking, and competition in the company's market is intense. The gap between revenue growth of 1.7% and RPO growth of 30.0% is the central tension in the quarter. Profit improvement so far rests on a leaner expense structure rather than a reacceleration of demand. The credit facility's own covenant language tracks the trailing four-quarter growth rate of recurring revenue, a reminder that reseller weakness feeds directly into the financing picture.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $102.6M | $99.5M | +3.2% | $100.9M | +1.7% |
| Gross profit | $80.2M | $78.1M | +2.7% | $73.8M | +8.7% |
| Gross margin | 78.2% | 78.5% | -0.4 pp | 73.2% | +5.0 pp |
| Research & development | $18.9M | $16.8M | +12.8% | $18.8M | +0.4% |
| Sales & marketing | $47.6M | $44.0M | +8.2% | $54.1M | -12.0% |
| General & administrative | $18.0M | $18.6M | -3.4% | $20.4M | -11.9% |
| Total operating expenses | $84.4M | $79.3M | +6.4% | $93.3M | -9.5% |
| Operating income (loss) | -$4.2M | -$1.2M | -243.4% | -$19.5M | +78.3% |
| Operating margin | -4.1% | -1.2% | -2.9 pp | -19.4% | +15.2 pp |
| Net income (loss) | -$3.4M | -$412.0K | -734.2% | -$20.0M | +82.8% |
| Net margin | -3.4% | -0.4% | -2.9 pp | -19.8% | +16.5 pp |
| Diluted EPS | -$0.03 | $0.00 | -$0.03 | -$0.16 | +$0.13 |
| Net retention rate | 98.0% | 97.0% | +1.0 pp | — | — |
Risks
The company's revenue growth rate has slowed, with 1% growth from the six months ended July 31, 2022 to the six months ended July 31, 2023, compared to 3% for the fiscal year ended January 31, 2023, 10% for the fiscal year ended January 31, 2022, and 19% for the fiscal year ended January 31, 2021. MD&A reports total revenue increased 1% year to date, while third-party reseller revenue decreased 8%.
Adverse economic conditions including inflation or reduced technology spending may cause customers to reduce, suspend, or delay technology spending, request contract renegotiations, extended billing and payment terms, shortened contract durations, or non-renewal. MD&A notes these pressures and that changes in contracting activity may not be fully reflected until future periods.
A significant portion of revenue is dependent on third-party reseller customers, whose efforts Yext does not control. Third-party reseller revenue decreased 6% for the quarter ended July 31, 2023 and 8% for the six months ended July 31, 2023, and reseller ARR declined 6% year over year to $70.5 million as of July 31, 2023.
Significant leadership turnover (CEO, CFO, and CRO departures) and a reduction in force initiated in late January 2023 resulted in additional terminations of approximately 8% of overall headcount that took effect in the three months ended April 30, 2023. Headcount has declined, and the company may not effectively manage these changes.
Revenue growth is substantially reliant on the sales force, but the company recently reduced sales personnel as part of strategic realignment in how it goes to market. Failure to adequately recruit, train, and retain sales personnel could impede growth.
The Answers platform utilizes AI technology, which is subject to a complex and evolving regulatory landscape, including data protection and privacy laws. Different jurisdictions have varying approaches to regulating AI, creating compliance cost and enforcement risk.
The company recently began offering capacity-based pricing for its Pages and Search products. There is no assurance that this new pricing and distribution model will be successful, and changes to pricing models could adversely affect operating results.
The credit facility was provided by Silicon Valley Bank, which failed and was placed into receivership; First Citizens Bank assumed obligations. The company also holds cash in large financial institutions exposed to failure risk. Inability to access the credit facility or further bank failures could adversely affect business.
For fiscal years ended January 31, 2023, 2022, and 2021, the top five customers accounted for approximately 9%, 8%, and 9% of revenue, respectively. Loss of a significant customer could materially adversely affect revenue.
The platform faces competition in a rapidly evolving market. The search product launched in October 2019 faces competition from established enterprise search companies that may have greater experience, name recognition, and resources.
Competition for qualified personnel is intense, particularly for software developers with search expertise and in the New York area. Recent decreases in the company's stock price may decrease retention, and equity awards vesting may require larger grants, causing dilution.
Revenue for the six months ended July 31, 2023 included a negative impact from foreign currency exchange rates of approximately $1.0 million on a constant currency basis, while the quarter ended July 31, 2023 had a positive impact of approximately $0.4 million. International expansion exposes the company to regulatory, economic, and political risks.
SaaS KPIs
All quarters →Customer Count
Remaining Performance Obligations (RPO)
Adjusted EBITDA
Non-GAAP Operating Margin
ARR
Dollar-Based Net Retention Rate (Total Customers)
Total Annual Recurring Revenue
Dollar-Based Net Retention Rate (Direct Customers)
Dollar-Based Net Retention Rate (Third-Party Reseller Customers)
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 FY2024 (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.