Yext, Inc. — FY2021 Form 10-K Summary
Reporting period: Fiscal year ended January 31, 2021. The filing also reports fourth-quarter results for the three months ended January 31, 2021. Yext provides subscription software for managing business information and search experiences across customers’ websites and a network of approximately 200 third-party services.
Financial performance
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $354.7 million | $298.8 million | +19% |
| Gross profit / margin | $268.3 million / 75.6% | $221.8 million / 74.2% | Margin +1.4 percentage points |
| Operating loss | $94.3 million | $123.0 million | Loss narrowed |
| Net loss | $94.7 million | $121.5 million | Loss narrowed |
| Non-GAAP net loss | $22.4 million | $53.8 million | Excludes stock-based compensation |
| Operating cash flow | $1.2 million | $(30.8) million | Improved |
| Capital expenditures | $65.1 million | $11.9 million | Higher, primarily for office facilities |
- Quarter ended January 31, 2021: revenue was $92.2 million and net loss was $18.3 million, compared with $81.4 million and $30.6 million, respectively, in the year-earlier quarter.
- Operating expenses were $362.6 million, up from $344.8 million. Sales and marketing rose 5%, research and development rose 18%, while general and administrative expense declined 2%.
- Stock-based compensation was $72.3 million, versus $67.8 million; it is a substantial expense and is excluded from the company’s non-GAAP net loss measure.
- Cash and cash equivalents were $230.4 million at year-end, down from $256.1 million. Current assets were $376.2 million and current liabilities were $260.2 million.
- Unearned revenue, current, was $191.8 million, up from $176.8 million. Remaining performance obligations totaled $351.8 million; $332.8 million was expected to be recognized over the next 24 months.
- The company reported no drawn revolver balance. Its $50 million secured revolving facility had $35.7 million available and $14.3 million allocated to letters of credit. It was in compliance with its covenants at year-end.
- Operating lease liabilities totaled $137.7 million, and contractual operating lease payments were $187.7 million. The filing identifies no material off-balance-sheet arrangements.
Changes, outlook and risks
- Revenue growth slowed to 19% from 31% in FY2020. Management attributed FY2021 growth mainly to new customer subscriptions, with some expansion among existing customers.
- Dollar-based net retention fell to 102% from 106% (and 110% in FY2019), reflecting weaker expansion and, to a lesser extent, customer retention challenges. Management said COVID-19 could continue to weigh on renewals and expansion.
- COVID-19 disrupted sales activity and led to remote work, canceled in-person events, and reduced travel. Some customers, particularly in retail, food services, and Europe, reduced, delayed, or renegotiated technology spending. The duration and eventual financial impact remained uncertain.
- Management said cash and cash equivalents should fund projected operating requirements for at least the next 12 months. The filing provides no specific revenue, earnings, or cash-flow guidance.
- Business priorities included customer growth and expansion, international growth, product development, greater platform adoption, and extending the Knowledge Network. FY2021 initiatives included expanding Answers into five languages, launching Hitchhikers training, and adding integrations.
- Yext remained loss-making, with an accumulated deficit of $517.3 million. Management cautioned that continued investment and expense growth could prevent or delay profitability.
- Internal controls: Management and the independent auditor identified a material weakness in sales commission processes. Management concluded disclosure controls were ineffective, and the auditor issued an adverse opinion on internal control over financial reporting. The weakness had not been remediated by year-end; no material financial-statement misstatement or restatement was identified.
- Other key risks include customer and reseller renewals, competition and pricing, dependence on third-party platform integrations, cybersecurity and service availability, privacy regulation and cross-border data transfers, international operations, and the secured credit facility’s covenants. The company reported no material legal proceedings.
Most important facts for investors to verify
- Whether the sales-commission control weakness is remediated and whether controls operate effectively for a sufficient period.
- Whether retention and customer expansion stabilize or improve, and how COVID-related contract changes affect future revenue.
- Whether operating cash generation improves after the unusually high FY2021 capital expenditures, and whether liquidity remains adequate.
- How much of reported growth is supported by new subscriptions, renewals, and expansion, including the conversion of unearned revenue and remaining performance obligations into revenue.
- The scale and persistence of stock-based compensation, ongoing losses, lease commitments, and potential dilution.