Yext Inc. (YEXT) 2025 Q2 Earnings Call Summary

Optimistic Highlights

• Boomerang Customers

Yext successfully brought back 9 former customers in the last quarter, indicating strong customer satisfaction and value proposition.

• Hearsay Acquisition

Positive customer reactions to the Hearsay acquisition, with joint customers excited about unified data platforms and better analytics.

• Generative AI Potential

Yext sees long-term potential in generative AI, expecting it to drive significant value through improved data strategies and platform capabilities.

• Revenue Synergies

Opportunities for revenue synergies from cross-selling Hearsay and Yext products to existing customers, leveraging unified platforms.

• Product Innovation

Launch of a non-financial services social management and analytics platform, expected to drive additional growth.

Pessimistic Highlights

• Economic Uncertainty

Continued economic uncertainty, including elections, interest rates, and geopolitical risks, impacting customer investment decisions.

• Conservative ARR Growth

Yext is taking a cautious approach to ARR growth expectations due to the challenging macroeconomic environment.

• Dilutive Impact of Hearsay

Hearsay acquisition is currently dilutive to Yext's EBITDA margins, though expected to improve with synergies.

• Slow AI Adoption

Generative AI is not yet driving significant bookings, with large enterprises cautious about compliance and implementation.

• Competitive Pressure

Yext faces ongoing competitive pressure, with some customers initially leaving for competitors but later returning.

Company Outlook

• Stable to Modest ARR Growth

Yext expects stable to modest ARR growth for the year, with potential for improvement if economic conditions stabilize.

• Margin Improvement

Targeting low-20s consolidated adjusted EBITDA margin by year-end, with further improvements expected next fiscal year through synergies and efficiency gains.

• Focus on Customer-Centricity

Emphasis on meeting customer needs with flexible pricing and commitment structures, particularly in the reseller business.

• Long-Term AI Strategy

Continued investment in AI and data strategies, with expectations of significant long-term value generation.

• Integration of Hearsay

Focus on integrating Hearsay to drive both revenue and cost synergies, enhancing overall platform capabilities.

Q & A Highlights

• Q: Updated revenue guide and Hearsay contribution? (Tom White, D.A. Davidson)

  A: The Q3 and full-year guide includes two full quarters of Hearsay revenue. The guide reflects top-line synergies and joint go-to-market efforts. (Darryl Bond)

• Q: Consolidation of software vendors and market cycle? (Tom White, D.A. Davidson)

  A: Customers are consolidating software vendors to reduce workload and improve data consistency. Yext is well-positioned to benefit from this trend. (Mike Walrath)

• Q: Upsell opportunities with Hearsay? (Rohit Kulkarni, ROTH Capital Partners)

  A: Opportunities exist with joint customers and those not yet using Hearsay. Focus on creating value through unified data platforms and workflows. (Mike Walrath)

• Q: Gen AI adoption timeline? (Rohit Kulkarni, ROTH Capital Partners)

  A: AI adoption will take time, with significant long-term potential. Current focus is on safe, constrained use cases like automated review responses. (Mike Walrath)

• Q: Revenue synergies from Hearsay integration? (Ryan MacDonald, Needham)

  A: Similar sales processes and customer support between Yext and Hearsay. Opportunities to cross-sell and extend Hearsay functionality beyond financial services. (Mike Walrath)

• Q: Adjusted EBITDA margin outlook? (Ryan MacDonald, Needham)

  A: Hearsay is currently dilutive to margins, but overall margin improvement expected through synergies and efficiency gains. (Darryl Bond)

• Q: Boomerang customers returning? (Naved Khan, B. Riley Securities)

  A: Customers are returning due to unmet promises from competitors. Yext is making it easy for them to come back and quickly regain value. (Mike Walrath)

• Q: Guidance for full year vs. Q3? (Naved Khan, B. Riley Securities)

  A: Q4 implied EBITDA margin around 22%. Legacy Yext business is in mid-20s, with Hearsay being slightly dilutive. (Darryl Bond)

• Q: Move to usage-based ARR for resellers? (Naved Khan, B. Riley Securities)

  A: Shift to meet customer needs with flexible pricing and commitment structures. This may dampen reported ARR but aligns with customer-centric approach. (Mike Walrath)