Yext, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended January 31, 2023, compared primarily with FY2022. The filing is an annual report, not a standalone Q4 report; quarterly results are not clearly provided in the supplied text.
Business context
Yext sells cloud subscriptions for its Answers platform, which helps businesses manage structured business information and publish it through their own websites and a network of more than 200 third-party services. Products include Listings, Pages, Search, Reviews, and Analytics.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $400.9 million | $390.6 million |
| Gross profit / margin | $296.9 million / 74.1% | $292.3 million / 74.8% |
| Operating loss | $64.8 million | $90.0 million |
| Net loss | $65.9 million | $93.3 million |
| Operating cash flow | $17.9 million | $21.8 million |
| Capital expenditures | $6.2 million | $13.4 million |
- GAAP diluted loss per share was $0.53, versus $0.73 in FY2022. Adjusted EBITDA, a non-GAAP measure, was $15.8 million versus $0.3 million; non-GAAP net loss, excluding stock-based compensation, was $2.9 million versus $19.8 million.
- Cash and cash equivalents were $190.2 million at year-end, down from $261.2 million. Current assets were $346.6 million and current liabilities $290.9 million. The company reported no drawn borrowings under its revolving credit facility at year-end; $14.1 million of the $50 million facility was allocated to letters of credit, leaving $35.9 million available.
- Total liabilities were $395.7 million, including $118.7 million of operating lease liabilities. Unearned revenue, current, was $223.7 million. Remaining performance obligations were $447.7 million, of which $387.8 million was expected to be recognized over the next 24 months.
- The company repurchased 13.8 million shares for $77.4 million during the year under a $100 million authorization. Financing cash outflow was $79.0 million.
Changes versus prior period
- Revenue growth slowed to 3% from 10% in FY2022 and 19% in FY2021. Management attributed FY2023 growth primarily to new and expanded subscriptions; foreign exchange reduced reported revenue by approximately $10.2 million. Constant-currency growth was 5%.
- Direct-customer revenue increased 5% to $318.0 million; third-party reseller revenue fell 5% to $82.8 million, primarily due to customer attrition. Total ARR rose 3% to $400.4 million; direct-customer ARR increased 5%, while reseller ARR declined 6%.
- Total dollar-based net retention rate, newly presented on an ARR basis, was 96%, down from 101% in FY2022. Direct retention was 97% and reseller retention 92%. Under the prior revenue-based methodology, the FY2023 rate was 95%.
- Gross margin decreased 0.7 percentage points. Cost of revenue increased 6%; operating expenses decreased 5%, principally as sales and marketing spending fell 8%. Net loss narrowed, but the company remained GAAP-loss-making.
- Leadership changed substantially: the co-founder/CEO and CFO departed in March 2022; Michael Walrath became CEO and Darryl Bond CFO. A further reduction in force initiated in January 2023 affected approximately 8% of headcount early in the next fiscal year.
Outlook, risks, and unusual items
- The filing provides no numeric FY2024 revenue or earnings guidance. Management stated that growth in the coming year was expected to be slower and that it was reducing near-term operating expenses. It also noted plans to transition part of professional services delivery to third-party providers, which could weigh on reported growth.
- Management said existing cash and cash equivalents were expected to cover projected operating requirements for at least 12 months. This assessment should be considered alongside the company’s losses, slowing growth, retention trends, and the uncertainty surrounding its credit facility.
- SVB, the credit facility provider, was placed into receivership on March 10, 2023, after year-end. Yext said substantially all cash was held at other large institutions as of March 15 and it did not expect a material cash impact, but access to the facility and replacement of lease-related letters of credit could be uncertain.
- Other key risks include macroeconomic pressure on customer spending and renewals; reseller attrition; competition and dependence on third-party publisher integrations; execution amid leadership and organizational changes; privacy and cybersecurity obligations; and emerging generative-AI compliance, reliability, and reputational risks.
- The company reported no legal proceedings material to its business or financial condition. The auditor issued unqualified opinions on the financial statements and internal controls. A previously identified sales-commission control weakness was reported as remediated.
Important facts for investors to verify
- Whether slower growth and weaker retention stabilize, and whether reseller attrition continues.
- How much of revenue growth is organic versus currency effects, and whether reported results track ARR and remaining performance obligations.
- Whether cost reductions improve operating cash flow and the path to GAAP profitability, including the ongoing effects of substantial stock-based compensation.
- Availability and terms of the SVB credit facility, including any replacement of the approximately $14 million in letters of credit.
- Cash use following the share repurchases, and the company’s substantial office lease commitments.
- Execution of the leadership and workforce changes, the services-provider transition, and the commercial and compliance risks of new AI features.