Yext, Inc. Q2 FY2024 earnings call

• Q2 results were consistent with or slightly ahead of expectations, with revenue, non-GAAP EPS, and adjusted EBITDA all meeting targets.
• Total ARR grew 3% YOY, direct ARR up 5%. Sales productivity and execution improved, and end-to-end demand generation efforts are progressing.
• Product innovations included the Yext summer release with DXP enhancements leveraging AI in chat, content, and reviews. Marketing campaigns launched targeting key personas, showing positive impacts like increased event registrations.
• Notable upsells and new logo wins occurred, such as with Benefit Cosmetics, Guaranty Bank & Trust, and Columbia Sportswear, among others.

In Q2, Yext generated revenue of $102.6 million. Total ARR grew 3% year-over-year, with direct ARR up 5%. Direct customers accounted for 82% of total ARR, while reseller partners made up 18% of total ARR. Gross profit was $81 million, resulting in a gross margin of 78.9%. The company's non-GAAP EPS was $0.07 and adjusted EBITDA was $11.8 million.

• For Q3, Yext expects revenue in the range of $101.5 million to $102.5 million, adjusted EBITDA in the range of $11.5 million to $12.5 million, and non-GAAP EPS in the range of $0.06 to $0.07.
• For full fiscal year 2024, the company projects revenue between $405 million and $407 million, adjusted EBITDA between $50 million and $52 million, and non-GAAP EPS between $0.29 and $0.30.

• Macro-economic uncertainty, including budget scrutiny, prolonged sales cycles, and conservatism from enterprises.
• Impact of reseller ARR decline due to a single customer churn from an M&A event.
• Cost-cutting pressures within existing customers affecting renewals and sales cycles.

Q: Tom White from D.A. Davidson asked about direct business ARR growth, elongated sales cycles, and reseller business.

A: Mike Walrath discussed macro pressures, longer sales cycles, and stabilization in reseller ARR excluding M&A.

Q: Rohit Kulkarni with ROTH MKM inquired about AI product market reception and hiring plans.

A: Mike Walrath talked about AI interest but longer adoption in regulated enterprises, and hiring being targeted with seasonal compensation cycles.

Q: Naved Khan with B. Riley Securities asked about sales and marketing expenses, pricing packaging for renewals, and impact of lower-margin services.

A: Mike Walrath discussed seasonal compensation, pricing packaging for renewals, and low-single-digit impact from services discontinuation.

Q: Chris Madison with William Blair asked about margin expansion and revenue outlook.

A: Mike Walrath discussed margin expansion levers and revenue growth tied to macro improvement.

Q: Ryan MacDonald with Needham asked about boomerang customers and sales cycle strategies.

A: Mike Walrath and Marc Ferrentino talked about boomerang customers due to competition issues and ongoing optimization of sales strategies.