Yext (YEXT) Q2 2025 earnings summary

Executive summary

• Revenue declined 5% year-over-year to $97.9 million for the quarter ended July 31, 2024, mainly due to customer attrition, but profitability and margins improved, with Adjusted EBITDA and non-GAAP EPS exceeding guidance due to cost optimization and restructuring.

• Integration of Hearsay Systems completed in August, with joint go-to-market strategies, cross-selling opportunities, and positive customer feedback on consolidation benefits.

• Direct ARR grew sequentially for the first time in a year, indicating stabilization despite ongoing macroeconomic headwinds and budget pressures.

• A restructuring plan reduced workforce by 12% and incurred $5 million in related costs to lower operating expenses and position for future growth.

• Customers are seeking to reduce software complexity and improve efficiency, driving interest in unified platforms.

Financial highlights

• Q2 FY25 revenue was $97.9 million, down from $102.6 million in Q2 FY24; gross margin was 77.2%, and Adjusted EBITDA was $9.8 million, down from $11.8 million year-over-year.

• Net loss for the quarter was $4.1 million (GAAP), with non-GAAP net income of $6.8 million; non-GAAP EPS was $0.05.

• ARR at $381.8 million, down 4% year-over-year, impacted by large customer churn and FX headwinds.

• Cash and cash equivalents totaled $234.8 million as of July 31, 2024.

• Adjusted EBITDA margin guidance for Q4 is approximately 22%, with Hearsay being slightly dilutive to margins.

Outlook and guidance

• Q3 FY25 revenue projected at $113.0–$113.5 million, Adjusted EBITDA $21.5–$22.0 million, non-GAAP EPS $0.11–$0.12.

• FY25 revenue expected at $420.0–$421.0 million, Adjusted EBITDA $66.0–$67.0 million, non-GAAP EPS $0.35–$0.36.

• Stable to modest ARR growth is expected for the year, with a conservative approach due to macroeconomic risks and customer attrition.

• Margin expansion is anticipated next year through operational efficiencies and potential revenue growth.

• Existing cash and cash equivalents, including the Hearsay acquisition, are expected to meet operating requirements for at least the next 12 months.