Yext (YEXT) Q1 2025 earnings summary

Executive summary

• Announced definitive agreement to acquire Hearsay Systems (also referred to as Hearsay Social, Inc.) for $125 million in cash, with up to $95 million in contingent consideration based on milestones over two years, and up to $75 million in earnouts referenced in some filings.

• Hearsay Systems specializes in compliance-driven digital client engagement for financial services, serving over 260,000 advisors and agents.

• Combined platforms will serve over 3,000 global brands, including major U.S. banks and insurance firms.

• Revenue for Q1 FY2025 was $96.0 million, down 3% year-over-year, primarily due to the attrition of a large customer.

• Net loss increased to $3.8 million from $0.4 million in the prior year quarter.

Financial highlights

• Hearsay generated approximately $60 million in revenue in its prior fiscal year ended December 31, 2023 (unaudited).

• Hearsay operates around free cash flow break-even.

• Adjusted EBITDA for Q1 FY2025 was $9.6 million, down from $14.4 million year-over-year.

• Non-GAAP net income was $6.4 million, compared to $10.6 million in the prior year.

• Cash and cash equivalents totaled $246.1 million as of April 30, 2024.

Outlook and guidance

• Full-year revenue guidance was adjusted downward due to slower pipeline conversion, longer sales cycles, and budget scrutiny.

• Expectation of mid-single-digit ARR growth by end of fiscal 2025 and high single digits by first half of next year, driven by improved renewal management and pipeline visibility.

• Guidance does not yet include any impact from the Hearsay acquisition; updates will follow post-closing.

• Management expects the restructuring plan to incur $5 million in charges, mostly in Q2 FY2025.

• The Hearsay acquisition is expected to close in the second half of FY2025.