Summary
Yext's fiscal 2026 second quarter landed with a corporate event sitting on top of the financials. On August 18, 2025, the company said Chief Executive Officer and Chairman Michael Walrath submitted a non-binding proposal to acquire all shares he does not already own at $9.00 per share in cash, backed by financing sources he described as reputable and well capitalized. The board formed a Special Committee of independent directors, which retained BofA Securities and Wilson Sonsini Goodrich & Rosati. Walrath said he is open to working with other qualified bidders if superior proposals emerge. Yext also withdrew its full fiscal year 2026 guidance from the June 3, 2025 stockholder letter and skipped the quarterly conference call, saying it expects results for the quarter ended July 31, 2025 to be within or better than those earlier ranges.
Revenue was $113.1 million in the quarter, up 15.5% from the prior-year quarter, and $222.6 million for the six months, up 14.8%. Hearsay, acquired on August 1, 2024, drove essentially all of the increase. The direct channel carried the growth while the third-party reseller channel was essentially flat year over year. Subscription and support stayed at 93% of revenue, with professional services at 7%. Foreign currency added roughly $1.2 million to the quarter, and constant currency growth was 14%. Total annual recurring revenue ended at $444.4 million, up 15%, with direct ARR up 18% to $369.5 million and reseller ARR up 1% to $74.8 million. Total dollar-based net retention improved to 95% from 91%, and gross retention to 88% from 84%.
Profit swung sharply. Operating income was $29.7 million for the quarter, turning profitable from a year-earlier operating loss, and the operating margin reached 26.2%, up from a negative margin a year ago. Net income was $26.8 million, swinging to a profit from a year-earlier net loss, and diluted EPS was $0.03, also up from a prior-year loss per share. Net income for the six months was $27.5 million, up from a year-earlier loss, so the second quarter carried almost all of the profit. Gross profit rose 12.5% to $85.0 million, but gross margin fell to 75.2% for the quarter and 75.2% for the six months, down from the prior-year periods as amortization of acquired intangibles raised cost of revenue. The operating swing leaned on a $23.4 million decrease in the fair value of Hearsay contingent consideration, which turned general and administrative expense into a small benefit for the quarter. Non-GAAP net income was $16.3 million, and Adjusted EBITDA was $26.4 million.
Cash generation improved. Operating cash flow was $8.4 million for the quarter, up from a year-earlier use of cash, and $46.1 million for the six months, up 66.8%. Free cash flow, which subtracts capital expenditures from operating cash flow, was $45.0 million for the six months. Capital expenditures were $0.6 million in the quarter and $1.1 million for the six months. Deferred revenue rose 18.8% to $185.6 million, and remaining performance obligations were $445.0 million, up 12.2%. Cash and cash equivalents totaled $178.8 million at July 31, 2025. Yext borrowed $100.0 million under new BlackRock term loan facilities that allow up to $200.0 million in aggregate. Those facilities require at least $35.0 million of qualified cash and carry an excess cash flow sweep of up to 30% if annualized recurring revenue drops below $350.0 million.
Risks cluster around the deal and the macro backdrop. The proposal is non-binding, and the company warned that no transaction may result or be approved, with potential litigation, customer and employee disruption, and regulatory approval risk attached. Management also flagged foreign currency swings, inflation, tariffs, interest rates, recession risk, and geopolitical shifts, and noted that customers may shorten contracts, push for concessions, or decline to renew. Third-party reseller revenue slipped over the six months. The new debt adds covenant tests and a mandatory prepayment trigger tied to ARR. The share repurchase program had $36.7 million left as of July 31, 2025, and the Places Scout acquisition closed in February for $20.3 million in cash. Guidance is gone for the full fiscal year 2026, which leaves the buyout process as the main near-term driver.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $113.1M | $109.5M | +3.3% | $97.9M | +15.5% |
| Gross profit | $85.0M | $82.4M | +3.2% | $75.6M | +12.5% |
| Gross margin | 75.2% | 75.2% | -0.0 pp | 77.2% | -2.0 pp |
| Research & development | $23.4M | $21.9M | +6.6% | $18.6M | +25.7% |
| Sales & marketing | $32.1M | $36.2M | -11.4% | $42.0M | -23.6% |
| Total operating expenses | $55.4M | $81.3M | -31.9% | $83.2M | -33.4% |
| Operating income (loss) | $29.7M | $1.1M | +2554.2% | -$7.6M | +492.2% |
| Operating margin | 26.2% | 1.0% | +25.2 pp | -7.7% | +34.0 pp |
| Net income (loss) | $26.8M | $770.0K | +3374.2% | -$4.1M | +759.4% |
| Net margin | 23.6% | 0.7% | +22.9 pp | -4.1% | +27.8 pp |
| Diluted EPS | $0.03 | $0.01 | +$0.02 | -$0.03 | +$0.06 |
| Net retention rate | 95.0% | 95.0% | ±0.0 pp | 91.0% | +4.0 pp |
Risks
Yext announced a non-binding proposal by CEO and Chairman Michael Walrath to acquire all outstanding shares not already owned by him at $9.00 per share in cash. The filing says uncertainty around the proposal may impair employee retention, divert management time, and delay customer or partner decisions regardless of whether a transaction is completed.
Revenue was up 14.8% year to date to $222.6M for the six months ended July 31, 2025, but the filing states the increase was entirely inorganic from the Hearsay acquisition and without it revenue would have slightly declined year over year. The filing also states third-party reseller revenue decreased for the same six-month period due to customer attrition.
Yext completed the Hearsay acquisition on August 1, 2024 and Places Scout on February 7, 2025 and is still integrating both businesses. The filing cites limited acquisition experience and risks that acquisitions may not yield expected returns, may lead to impairment charges, or may fail to retain acquired customers.
A significant portion of revenue depends on third-party reseller customers, and the top five customers accounted for approximately 8% of revenue in fiscal 2025. The filing notes prior attrition of a large customer and says loss of additional large customers could materially reduce revenue.
In May 2025 Yext entered a $200M term loan facility with BlackRock, borrowed $100M, and became subject to financial covenants including minimum qualified cash of $35M and minimum consolidated EBITDA. The agreement includes an excess cash flow sweep of up to 30% if annualized recurring revenue is less than $350M.
The filing states macroeconomic uncertainty, including inflation, interest rates, tariffs, trade restrictions, and changes in government policy, may cause customers to reduce, suspend, or delay technology spending or request contract concessions. Foreign currency fluctuations positively affected revenue, but may continue to create volatility.
Yext sells to enterprises with complex operating environments, creating long and unpredictable sales cycles. The filing says macroeconomic uncertainty may lengthen sales cycles, lower demand or prices, and reduce new subscriptions.
The strategic process and recent leadership changes may impair Yext's ability to attract, retain, and motivate employees, including key personnel. The filing also says competition for software developers and sales personnel is intense, and recent stock price declines may hurt retention.
Yext is incorporating generative AI into some products and faces compliance and reputational risks from the new and developing technology. The filing also warns that regulatory and legislative developments related to AI could adversely affect its use of such technologies.
Although net income was $27.5M for the six months ended July 31, 2025, the filing says Yext has a history of losses and may not achieve or sustain profitability. It also states operating expenses may increase in future periods, requiring higher revenue to offset those costs.
The filing states revenue growth is substantially reliant on a relationship-driven sales force, and Yext may change the size of its sales force as it realigns go-to-market strategy. This recently resulted in a net decrease in sales personnel in the near term.
SaaS KPIs
All quarters →Dollar-Based Net Retention Rate (Total Customers)
Total Annual Recurring Revenue
Dollar-Based Gross Retention Rate (Total Customers)
Summary, forecast, risks and KPIs are extracted from Yext, Inc.'s SEC filings for Q2 FY2026 (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.