Summary
Yext entered its third fiscal quarter of 2026 with a smaller top line but much better profitability. Revenue was $112.0 million, down 1.7% from the prior-year quarter. Gross profit was $82.8 million, down 5.6%, and gross margin fell to 73.9%, down 3.0 percentage points. The pressure came from higher cost of revenue and customer attrition in direct customers, while reseller revenue was relatively stable. The bottom line improved sharply. Operating income was $7.8 million, up from a loss and swung to a profit. Net income was $6.1 million, also up from a loss and swung to a profit. Diluted EPS was $0.01, up from a loss. For the first nine months, revenue was $334.6 million, up 8.7%, and net income was $33.7 million, up from a loss. The year-to-date revenue gain was entirely driven by the Hearsay acquisition completed in August 2024, not by organic growth.
Annual recurring revenue was $444.4 million as of October 31, 2025, down 1% from a year earlier. Direct customers made up 83% of total ARR at $368.6 million, a 2% decrease. Third-party reseller ARR was $75.8 million, a 2% increase and 17% of the total. Dollar-based net retention was 96% for total and direct customers, while reseller net retention was 99%. Gross retention was 88% for total customers, which points to persistent churn even as net retention held near 100%. Deferred revenue was $154.6 million, down 3.9%. Remaining performance obligations were $415.6 million, down 9.1%. Those backlog and billings metrics suggest that near-term subscription revenue will remain under pressure.
Cash generation was mixed. Operating cash flow was -$19.8 million for the quarter, down 25.5%. For the nine months, operating cash flow was $26.3 million, up 121.8%. Capital expenditures were $0.5 million for the quarter, down 10.7%, and $1.65 million year to date, down 6.7%. Free cash flow, a non-GAAP measure, was negative $20.3 million for the quarter and positive $24.7 million for the nine months. Adjusted EBITDA was $27.2 million, compared with $23.1 million a year earlier, and the adjusted EBITDA margin was 24.3%. Non-GAAP net income was $17.5 million, and non-GAAP EPS was $0.14. Operating margin was 6.9%, up 16.0 percentage points, while the year-to-date operating margin was 11.5%, up 19.1 percentage points. Gross margin for the nine months was 74.8%, down 2.5 percentage points. The profit gains came largely from lower operating expenses and acquisition-related fair value adjustments, not from revenue growth.
Strategic uncertainty now sits over the story. CEO Michael Walrath submitted a non-binding proposal to acquire all outstanding shares not already owned by him at $9.00 per share in cash. A special committee of independent directors is reviewing the proposal with advisers, and the company says there is no assurance that a transaction will be approved or completed. Yext did not hold a conference call because of the pending proposal, and no outlook was provided for the next quarter or the full fiscal year. Other risks include macroeconomic weakness, foreign currency swings, inflation, tariffs, geopolitical events, and customer budget cuts. Customers may delay spending, renegotiate contracts, shorten contract terms, or fail to renew. The company also has restrictive debt covenants under its May 2025 credit agreement, including a minimum qualified cash requirement of $35.0 million and a minimum consolidated EBITDA test. With ARR, RPO, and deferred revenue all declining year over year, and gross retention at 88%, execution on renewals and cost discipline will matter more than headline profit growth in coming quarters.
Forecast
No forward guidance in this quarter's filings.
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2026 | Q2 FY2026 | QoQ | Q3 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $112.0M | $113.1M | -1.0% | $114.0M | -1.7% |
| Gross profit | $82.8M | $85.0M | -2.6% | $87.7M | -5.6% |
| Gross margin | 73.9% | 75.2% | -1.3 pp | 77.0% | -3.0 pp |
| Research & development | $22.6M | $23.4M | -3.2% | $21.1M | +7.3% |
| Sales & marketing | $34.0M | $32.1M | +6.1% | $43.7M | -22.1% |
| Total operating expenses | $75.0M | $55.4M | +35.5% | $98.1M | -23.5% |
| Operating income (loss) | $7.8M | $29.7M | -73.8% | -$10.4M | +175.0% |
| Operating margin | 7.0% | 26.2% | -19.3 pp | -9.1% | +16.1 pp |
| Net income (loss) | $6.1M | $26.8M | -77.1% | -$12.8M | +147.9% |
| Net margin | 5.5% | 23.6% | -18.2 pp | -11.2% | +16.7 pp |
| Diluted EPS | $0.01 | $0.03 | -$0.02 | -$0.10 | +$0.11 |
| Net retention rate | 96.0% | 95.0% | +1.0 pp | 91.0% | +5.0 pp |
Risks
Yext announced a non-binding proposal by CEO Michael Walrath on August 18, 2025 to acquire all outstanding shares at $9.00 per share in cash. Risk factors cite possible impairment of employee attraction and retention, diversion of management, customer delays, litigation and significant transaction costs, with no assurance a deal will be completed.
Revenue declined 1.7% year over year in FY2026 Q3 to $112.0 million, and the risk factors state revenue has slowed and even contracted in recent periods. MD&A notes the 9% year-to-date revenue increase was entirely driven by the Hearsay acquisition, and without it revenue would have declined year over year. RPO declined 9.1% and deferred revenue declined 3.9% versus the prior-year quarter.
MD&A attributes the year-to-date revenue increase entirely to the Hearsay acquisition and completed the Places Scout acquisition on February 7, 2025. Risk factors warn that integration may not yield expected returns, may divert management, and may lead to goodwill or intangible impairment charges.
Gross margin fell to 73.9% in FY2026 Q3 from 77.0% in the prior-year quarter, down 3.0 percentage points, and year-to-date gross margin fell 2.5 percentage points to 74.8%. Cost of revenue increased 11% in the quarter, partly due to $1.1 million of asset impairment charges from subleasing a floor of the corporate headquarters.
MD&A says macroeconomic uncertainty may cause customers to reduce, suspend or delay technology spending, request concessions such as extended billing and payment terms, shorten contract durations, or elect not to renew. Risk factors also cite inflation, tariffs and trade restrictions as adverse factors.
Risk factors state that Yext is incorporating generative artificial intelligence into some products and that this technology is new and may present compliance and reputational risks. Regulatory and legislative developments related to AI use could adversely affect its products, services and business.
Risk factors note that the top five customers accounted for approximately 8% of revenue in FY2025 and that a significant portion of revenue depends on third-party reseller customers whose efforts Yext does not control. Loss or non-renewal of large customers or resellers could materially adversely affect revenue.
Risk factors state that revenue growth is substantially reliant on the sales force and that failure to adequately manage it will impede growth. Yext recently experienced a net decrease in sales personnel before potentially growing headcount again.
SaaS KPIs
All quarters →Remaining Performance Obligations (RPO)
Adjusted EBITDA
Non-GAAP Gross Margin
Non-GAAP Operating Margin
Dollar-Based Net Retention Rate (Total Customers)
Adjusted EBITDA Margin
Free Cash Flow Margin
Dollar-Based Net Retention Rate (Direct Customers)
Dollar-Based Net Retention Rate (Third-Party Reseller Customers)
Free Cash Flow
Dollar-Based Gross Retention Rate (Total Customers)
Summary, forecast, risks and KPIs are extracted from Yext, Inc.'s SEC filings for Q3 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.