Summary
Yext closed the third quarter of fiscal 2022 with revenue of $99.5 million, up 11.8% year over year. Gross profit rose 10.2%, to $74.3 million. The bottom line moved the other way. Net loss was $24.9 million, or $0.19 per diluted share, wider than the prior-year quarter, and the operating loss widened to $24.4 million. Gross margin slipped to 74.6% from 75.7% a year earlier, while operating margin was flat at -24.5% against -24.4%.
Cost growth is the main reason profit did not follow revenue higher. Cost of revenue rose 17%, driven by higher personnel costs and depreciation and partly offset by a $1.3 million decline in Knowledge Network application provider fees. Sales and marketing expense grew 3%. Research and development rose 24%, and general and administrative expense climbed 22%. On a non-GAAP basis, which strips out stock-based compensation, the net loss was $5.5 million, or $0.04 per share, compared with $2.8 million, or $0.02 per share, a year earlier. Weighted-average basic shares in that per-share math rose to 128.6 million from 120.7 million.
The demand picture looks better than the income statement. Customer count, which excludes small business and reseller accounts, grew 20% year over year to more than 2,700. Annual recurring revenue reached $387 million, up 12% from $346 million a year earlier. Subscription and support accounted for 92% of quarterly revenue, with professional services at 8%. Deferred revenue, called unearned revenue in the filing, was $151.5 million, up 17.7%. Remaining performance obligations were $337.2 million, up 18.1%, and $315 million of that is expected to be recognized over the next 24 months.
Cash and cash equivalents were $230 million as of October 31, 2021. Management states that existing cash will cover projected operating requirements for at least the next 12 months. The company also has a $50.0 million revolving credit facility, with $35.7 million available, and reported compliance with its debt covenants.
Cash flow is the soft spot. Net cash used in operating activities was $9.7 million for the quarter, a larger outflow than a year earlier. Capital expenditures fell to $1.8 million, down 87.2%. Through nine months, net cash used in operating activities was $7.3 million, an improvement over the same period a year earlier, and capital expenditures were $12.3 million, down 77.1%.
The nine-month income statement shows a similar mix. Revenue was $289.6 million, up 10.4%. Gross profit was $215.9 million, up 9.2%. The operating loss narrowed to $68.0 million, and the net loss narrowed to $70.1 million, or $0.55 per diluted share.
Guidance points to a non-GAAP net loss per share of $0.10 to $0.08 for the fourth quarter of fiscal 2022, based on 130.3 million weighted-average basic shares. For the full fiscal year 2022, the company projects a non-GAAP net loss per share of $0.22 to $0.20, based on 127.8 million weighted-average basic shares. The company also issued a fourth-quarter revenue outlook and raised its full-year fiscal 2022 revenue outlook.
Risks have not changed much. The company still points to COVID-19 disruptions, pressure on customers in retail and food services and in parts of Europe, requests for contract concessions and extended billing terms, and competition in enterprise search. Sales cycles and renewal activity remain exposed to those forces. Because revenue is recognized ratably over contract terms, changes in booking activity in the near term may not show up in reported results until later periods.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $99.5M | $98.1M | +1.4% | $89.1M | +11.8% |
| Gross profit | $74.3M | $71.5M | +3.9% | $67.4M | +10.2% |
| Gross margin | 74.6% | 72.9% | +1.8 pp | 75.7% | -1.1 pp |
| Research & development | $18.0M | $18.5M | -2.8% | $14.5M | +24.3% |
| Sales & marketing | $58.5M | $58.6M | -0.1% | $56.6M | +3.4% |
| General & administrative | $22.1M | $20.8M | +6.0% | $18.1M | +22.3% |
| Total operating expenses | $98.6M | $97.9M | +0.7% | $89.2M | +10.6% |
| Operating income (loss) | -$24.4M | -$26.4M | +7.8% | -$21.8M | -11.9% |
| Operating margin | -24.5% | -26.9% | +2.5 pp | -24.4% | -0.0 pp |
| Net income (loss) | -$24.9M | -$27.6M | +9.7% | -$22.0M | -13.1% |
| Net margin | -25.0% | -28.1% | +3.1 pp | -24.8% | -0.3 pp |
| Diluted EPS | -$0.19 | -$0.22 | +$0.03 | — | — |
Risks
The COVID-19 pandemic has had and is expected to continue to have an adverse effect on Yext's business, operations and financial results. Customers in highly impacted industries such as retail and food services and in certain geographies such as Europe have reduced, suspended or delayed technology spending, requested contract concessions, shortened contracts or elected not to renew.
Yext sells to enterprises with complex operating environments, which can produce long and unpredictable sales cycles. The filing states the COVID-19 pandemic has disrupted customers and made sales cycles more complex, and delayed or more complex sales cycles could cause operating results and financial condition to suffer in a given period.
Customers have no obligation to renew subscriptions. The filing says certain customers reduced subscriptions, elected not to renew, reduced contract lengths, requested extended billing and payment terms or sought favorable rates, and these trends contributed to a continued general decline in Yext's trailing twelve month dollar-based net retention rate through the first half of fiscal year 2022.
Yext's historical annual revenue growth rate declined from 34% between fiscal 2018 and fiscal 2019, to 31% between fiscal 2019 and fiscal 2020, and to 19% between fiscal 2020 and fiscal 2021. The company says recent growth rates may not be indicative of future performance and that failure to maintain consistent revenue growth could make profitability difficult.
Revenue growth is substantially reliant on Yext's sales force, and much of the sales process is relationship-driven. The filing states Yext has historically had difficulty recruiting and retaining sufficient sales personnel, that this difficulty has heightened during the COVID-19 pandemic, and that failure to expand and scale the sales force would impede growth.
Growth depends on strategic relationships with approximately 200 third-party Knowledge Network application providers, including Google, Amazon Alexa, Apple Maps, Bing, Facebook and Yelp. Loss or impairment of access, especially with one or a limited number of providers, could make the Knowledge Network less efficient or competitive and lead to loss of significant customers.
As of January 31, 2021, a material weakness in internal control over financial reporting related to processes to calculate, record and account for sales commissions continued to exist. Yext cannot estimate how long remediation will take, and failure to remediate could affect the reliability of financial reporting and investor confidence.
The top five customers accounted for approximately 9%, 11% and 14% of revenue for fiscal years ended January 31, 2021, 2020 and 2019, respectively, and third-party reseller customers comprise a significant portion of revenue. Loss of significant customers or reseller non-renewals could materially adversely affect operating results.
With the October 2019 launch of Answers, Yext faces competition from established enterprise search companies that may have greater experience, name recognition, customer relationships and resources. Some competitors offer lower prices, and if Yext cannot achieve target pricing levels, margins and operating results could be negatively affected.
Yext has limited experience with optimal prices and contract lengths and recently began offering capacity-based pricing for its Pages and Answers products. There is no assurance this new pricing and distribution model will be successful, and it could adversely affect revenue, gross margin, profitability and cash flow.
Yext depends on key executives, including co-founders Howard Lerman and Brian Distelburger. The filing notes changes to sales and research and development leadership in fiscal 2021 and difficulty hiring quota-carrying sales representatives during the COVID-19 pandemic; loss of key personnel could disrupt strategic initiatives.
Privacy and data security laws such as GDPR increase compliance costs and can impair Yext's ability to grow or offer services in some locations. The filing states that as customers evaluate new regulations, sales cycles have lengthened and transaction costs have increased as customers conduct additional diligence and negotiate contractual obligations.
Yext's credit facility contains restrictive covenants limiting operating flexibility and requires a consolidated quick ratio of at least 1.50 to 1.00, tested monthly. LIBOR is expected to be replaced, and the transition could increase interest costs or change access to capital.
SaaS KPIs
All quarters →Customer Count
Non-GAAP Gross Margin
ARR
Summary, forecast, risks and KPIs are extracted from Yext, Inc.'s SEC filings for Q3 FY2022 (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.