What Happened?
Shares of online reputation and search platform Yext (NYSE: YEXT) fell 8.5% in the pre-market session after the company reported underwhelming fourth-quarter results, with revenue merely in line with expectations while EPS fell short. Looking ahead, management decided to hold back on full-year revenue guidance, pointing to uncertainty around new product adoption and currency swings. Instead, they put out an adjusted EBITDA target of $100 million to $103 million, which signals they feel good about controlling costs. Overall, this quarter could have been better.
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What The Market Is Telling Us
Yext’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 24.2% on the news that the company reported fourth-quarter results with revenue exceeding expectations by a narrow margin, though EPS came in well ahead of Wall Street's estimates. Yext produced $14.8 million of adjusted EBITDA (vs estimates of $12.6 million), partly thanks to a huge year-on-year increase in its gross margin, which expanded from 74% to 78.6% thanks to the company's shift to a professional services strategy. This encouraging gross margin expansion trumped its underwhelming full-year revenue guidance, which was below expectations. A reason for the lower revenue guidance was the loss of a large customer during the quarter, but the market didn't seem to care. Overall, it was a decent quarter for Yext.
Yext is down 5.1% since the beginning of the year, and at $6.21 per share, it is trading 27.8% below its 52-week high of $8.60 from December 2024. Investors who bought $1,000 worth of Yext’s shares 5 years ago would now be looking at an investment worth $430.60.
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