Yext just got a bit bigger and went a bit deeper into digital presence management. The company announced that it has entered into a definitive agreement to acquire Hearsay Systems for $125 million. For those unfamiliar, Hearsay specializes in customer engagement and support in financial services.
One reason this deal is notable is that last part. Financial services companies are subject to a strict set of compliance laws for everything they do… and that very much includes their customer interactions. So everything from account support to helping them move money around needs to be buttoned up.
This means that software platforms that have such sensibilities and compliance protocols baked in are tremendously valuable. Similar can be said in other regulated industries, such as healthcare. And as we recently discussed with Brandmuscle, this is the case in marketing in the alcohol and beverage vertical.
For Yext, the acquisition opens up a large addressable market in financial services and allows it to go deeper. And based on all of the above domain-specific compliance, this is a classic example of a buy versus build decision. With one fell swoop, Yext has bought a ticket to expand its footprint.
Customer Lifecycle
With that broader backdrop, what specific capabilities is Yext buying here? Hearsay’s platform specializes in compliant customer engagement across social media, websites, voice, and text. For example, it supports 260,000 advisors and agents across the financial services sector.
One example is if you’re in a chat session with support personnel at your bank and they need to do things like communicate a policy statement and get your consent, that would be handled by companies like Heresay. Support agents are also persistently given information about what they can and can’t say.
In fact, Hearsay is particularly strong in these support scenarios, given its CRM integrations, and longstanding ties to Salesforce. For instance, Hearsay for Salesforce is a popular tool in the Salesforce AppExchange, and Salesforce Ventures went as far as buying a stake in the company in 2020.
“The acquisition enhances our ability to provide compliant messaging solutions and digital tools,” Yext Chief Data Officer Christian Ward told Localogy Insider, “crucial for industries like healthcare and finance, where transitioning from AI chat to direct human interaction is essential while maintaining privacy and regulatory standards. Hearsay’s robust capabilities perfectly align with our vision, ensuring a seamless and secure customer journey.”
Sum of its Parts
Besides opening a gate into a sizable new vertical, Yext also buys added capability. As Ward notes, this creates a sort of one-two punch in supporting human-agent interactions, while it continues to develop more conversational AI products. Having both covers all bases in terms of verticals that Yext can serve.
In fact, when you combine that with everything that Yext has built, the whole is greater than the sum of its parts. Yext now becomes a more powerful AI-driven platform in terms of capabilities and data inputs to help its customers improve both marketing and customer engagement, and do so across channels.
In that sense, there’s also a one-stop-shop benefit inherent in this acquisition. Yext can offer a more consolidated offering, which has benefits in not only the integrated synergies noted above but also simplicity and cost-efficiency for its customers. There are lots of possibilities for where this can go.
Meanwhile, the acquisition price was $125 million as noted, with an additional $95 million in performance-based targets on the table. The deal is expected to close in the second half of Yext’s fiscal 2025 (ending January 31, 2025), subject to standard closing conditions and regulatory approvals.
