Summary
Yext reported third quarter fiscal 2021 revenue of $89.1 million, up 16.6% from the prior-year quarter. Gross profit was $67.4 million, up 20.4%, and gross margin reached 75.7%, up 2.4 percentage points. The company still posted an operating loss of $21.8 million, but that loss narrowed by 49.2% year over year. Operating margin improved to negative 24.4%, up 31.7 percentage points. Net loss narrowed to $22.0 million, a 48.4% improvement, and diluted EPS was a loss of $0.18. On a non-GAAP basis, net loss was $2.8 million, or $0.02 per share, compared with a non-GAAP net loss of $21.6 million, or $0.19 per share, in the prior-year quarter. New customer subscriptions drove the revenue increase, according to management.
Operational metrics showed steady expansion. Annual recurring revenue rose 18% year over year to $346 million as of October 31, 2020. Customer count increased 28% to nearly 2,300, and structured facts in the Yext Knowledge Graph grew 58% to over 405 million. Remaining performance obligations were $285.4 million, up 13.3% from the prior-year quarter, with most of that amount expected to be recognized over the next 24 months. Unearned revenue was $128.7 million, up 19.7%. Product news included general availability of Hitchhikers, a Global Search Award for Yext Answers, the Fall '20 Release, and the expansion of Yext Answers into Japanese. Yext also launched a WordPress Answers Connector and appointed Hillary Smith to its board.
Cost discipline helped the bottom line. Sales and marketing expense fell on lower conference and travel costs after ONWARD20 was canceled, while research and development rose and general and administrative expense declined. Operating cash flow, reported as net cash used in operating activities, was $7.4 million in the quarter, up 76.7% from the prior-year quarter. Capital expenditures were $13.9 million, up 379.3%, mostly for the new corporate headquarters in New York and other office build-outs. For the nine months ended October 31, 2020, revenue was $262.5 million, up 20.7%; gross profit was $197.7 million, up 22.5%; gross margin was 75.3%, up 1.1 percentage points; net loss narrowed to $76.4 million; diluted EPS was a loss of $0.64; operating cash flow was $23.7 million used, up 44.1%; and capital expenditures were $53.9 million, up 634.3%.
For the fourth fiscal quarter ending January 31, 2021, Yext guided revenue to $87 million to $89 million and non-GAAP net loss per share to $0.10 to $0.08. The outlook assumes 123.3 million weighted-average basic shares outstanding. That guidance is for the next quarter only. The main risk remains COVID-19. The company said the pandemic has disrupted business operations and could continue to pressure sales efforts and revenue growth rates. Customers in hard-hit industries such as retail and food services, and in certain regions such as Europe, may reduce, suspend, or delay technology spending. Some may seek contract concessions like extended billing and payment terms, shorten contract durations, or decline to renew. Yext also faces execution risks around new products, competition, and real estate strategy. Capital expenditures for the new office build-outs are expected to keep weighing on cash used in investing for the fiscal year ending January 31, 2021. The March 2020 credit agreement includes covenants tied to recurring revenue growth and a consolidated quick ratio of at least 1.50 to 1.00, tested monthly, and the phase-out of LIBOR adds another financing risk.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $89.1M | $88.1M | +1.1% | $76.4M | +16.6% |
| Gross profit | $67.4M | $66.1M | +2.0% | $56.0M | +20.4% |
| Gross margin | 75.7% | 75.0% | +0.7 pp | 73.3% | +2.4 pp |
| Research & development | $14.5M | $14.8M | -2.1% | $13.0M | +11.3% |
| Sales & marketing | $56.6M | $56.0M | +1.1% | $62.0M | -8.6% |
| General & administrative | $18.1M | $19.5M | -7.3% | $23.9M | -24.3% |
| Total operating expenses | $89.2M | $90.3M | -1.3% | $98.8M | -9.8% |
| Operating income (loss) | -$21.8M | -$24.2M | +10.2% | -$42.8M | +49.2% |
| Operating margin | -24.4% | -27.5% | +3.1 pp | -56.1% | +31.7 pp |
| Net income (loss) | -$22.0M | -$25.1M | +12.2% | -$42.7M | +48.4% |
| Net margin | -24.8% | -28.5% | +3.8 pp | -55.9% | +31.2 pp |
Risks
The COVID-19 pandemic has disrupted operations and is expected to continue to adversely affect business and customer demand. The filing says customers in industries highly impacted by the pandemic, such as retail and food services, and geographies such as Europe, have reduced, suspended or delayed technology spending, requested contract concessions, shortened contract durations or elected not to renew.
COVID-19 has made sales cycles more complex and unpredictable for enterprise customers. The filing expects delayed and more complex sales cycles, and canceled in-person events such as ONWARD20, may adversely affect operating results in any given period.
As of January 31, 2020, management identified a material weakness in processes to calculate, record and account for sales commissions, including controls relying on certain outsourced IT service providers. If not remediated, the reliability of financial reporting, investor confidence and the value of common stock could be materially and adversely affected.
During the quarter ended October 31, 2020, Yext announced changes to the leadership team for its sales and research and development functions, and the departure of these key executives may disrupt strategic initiatives. The company also cites dependence on co-founders and key personnel, and it does not have employment agreements requiring executives to continue to work for it for any specified period.
Third-party reseller customers comprise a significant portion of revenue, and Yext does not control their efforts. Lower demand from certain reseller customers has resulted in them not renewing subscriptions, purchasing fewer licenses, attempting to renegotiate contracts and requesting extended billing and payment terms, with effects that may not be fully reflected until future periods.
For the fiscal year ended January 31, 2020, the top five customers accounted for approximately 11% of revenue, down from 14% in fiscal 2019 and 17% in fiscal 2018. Losing a significant customer could materially and adversely affect revenue and results of operations.
The market for Yext's features is competitive and rapidly evolving, and the October 2019 launch of Answers puts it against other search products. Competitors with longer operating histories or greater resources may respond more quickly or offer lower prices, which could harm revenue growth and margins.
Yext has limited experience with optimal prices and contract lengths, and it recently began offering capacity-based pricing for Pages and Answers, including an initial free-trial period for Answers. If the new pricing and distribution model is unsuccessful, revenue, gross margin, profitability and cash flow could be adversely affected.
The company faces evolving privacy, data protection and cross-border data transfer requirements, including GDPR and uncertainty around Privacy Shield. Compliance costs have increased, sales cycles have lengthened as customers conduct additional diligence, and failure to comply could lead to fines, litigation or limits on offering services in some locations.
Capital expenditures were $13.89M in FY2021 Q3, up 379.3% versus FY2020 Q3, and $53.95M in FY2021 year to date, up 634.3% versus FY2020 year to date, primarily for the new corporate headquarters and office build-outs. Continued investments and lease obligations may limit operating flexibility.
The March 2020 Credit Agreement provides a $50.0M senior secured revolving facility with financial covenants, including maintaining a consolidated quick ratio of at least 1.50 to 1.00 and, when liquidity thresholds are not met, a trailing four-quarter ordinary course recurring revenue growth rate. Restrictive covenants and LIBOR phase-out may limit operating flexibility.
Research and development expense increased 11% in FY2021 Q3 and 23% in FY2021 year to date, and the company must successfully develop and market new features such as Answers. If enhancements do not achieve market acceptance, revenue growth and competitive position could suffer.
SaaS KPIs
All quarters →Customer Count
Remaining Performance Obligations (RPO)
ARR
Structured facts in Yext Knowledge Graph
Summary, forecast, risks and KPIs are extracted from Yext, Inc.'s SEC filings for Q3 FY2021 (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.