Yext, a company that founder Heward Lerman says exists to “disrupt keyword-based search” announced last week that it grew revenues by 19% for the year ending January 31, 2021.
The “Answers” company generated total revenue of $354.7 million for its FY 2021. Its gross profit grew 21% to $266.3 million and saw its gross margin grow from 74.2% to 75.6% year to year. And the company narrowed its net loss per share from $1.09 to $0.79.
Yext also grew its customer base (excluding SMBs and resellers) by 21% to 2,400. And ARR (annual recurring revenue) moved up 8% to $354 million.
The Year Ahead
Yext also provided guidance for fiscal Q1 (ending April 30) and the full financial year. The company projects it will take in between $375 million and $380 million for the full year. This is is roughly a 6% to 7% growth rate, lower than the 19% it just reported for FY 2021.
Yext also expects to make progress this year on reducing its net losses. For the full year, the company expects to generate a loss of between $0.22 and $0.17 per share. That’s a substantial improvement over the $0.79 it just reported.
After announcing its earnings on March 3 Yext saw its share price decline by about 12% before the weekend. The share fell from 17.30 at the open on March 3 to 15.22 at the close on March 5. This reaction may have been a response to the guidance.
Ongoing Headwinds
On last week’s earnings call, Howard and his team talked about the ongoing headwinds Yext faces, which they largely attribute to the pandemic. Its listings business, the company’s heritage, is focused on location-based search in a time when people are staying at home. Still the company managed to grow despite the headwinds.
“I recently took a drive around Aventura, Florida. The popular mall was pretty empty. Shopping centers look like they’re at 20% capacity,” Howard said on the call. “Parking is almost empty. Despite all of that, ARR for our listings product still managed to grow last year, and that is a sign of its resilience and strategic significance for our customers.”
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The ongoing pandemic has tempered Yext’s outlook.
“We continue to be conservative with our outlook with regard to the current macroeconomic pressures that are happening in the world. We are in the business primarily or have been primarily in the business of serving location-based businesses,” Howard said. “As locations are closed, that is a bit more challenging in certain location-based verticals. As the world comes back, we’ll invest and continue to get back into those industries as things open up as those companies get back to business.”
These days Yext is heavily focused on selling its Answers product to enterprises. And Answers, an on-site search product designed to keep more traffic on corporate sites (and away from Google), is not dependent on location. Howard said the company closed 130 Answers deals in Q4 vs. 86 in Q3. Some of the “logos” Yext added to its Answers roster last year include La Poste (the French post office), JP Morgan Chase, Liberty Mutual, and others.
On the enterprise side, the biggest challenge seems to involve upselling existing corporate customers.
“Up-sells aren’t happening to the extent that we think they should. We think that’s a lot to do with macroeconomics,” said CFO Steve Cakebread. “And while there’s a lot of people interested, there are still people being very conservative with how they spend their money until they see, not just the light at the end of the tunnel but they’re at the end of the tunnel.”
