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YI

Yext, Inc. (YEXT)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 delivered solid top-line acceleration and substantial margin expansion: revenue $114.0M (+13% Y/Y) and Adjusted EBITDA $23.1M (20.3% margin), aided by the Hearsay acquisition and disciplined cost execution .
  • Non-GAAP EPS was $0.12 vs. $0.09 in the prior-year quarter; GAAP EPS was $(0.10), reflecting acquisition-related costs; non-GAAP gross margin improved to 79.4% .
  • Management guided Q4 FY25 revenue to $112.4–$112.9M, Adjusted EBITDA to $24.5–$25.0M, and non-GAAP EPS to $0.12–$0.13; FY25 revenue guidance was maintained/narrowed to $420.3–$420.8M and EBITDA raised to $67.0–$67.5M .
  • Narrative catalysts: (1) AI-driven search fragmentation positioning Yext favorably; (2) Hearsay integration progressing with $16.4M Q3 revenue and $62.8M ARR contribution; (3) FX tailwinds in Q3 turning to a Q4 headwind, explaining the sequential guide dynamics .

What Went Well and What Went Wrong

  • What Went Well

    • Margin step-up: Adjusted EBITDA rose to $23.1M with 20.3% margin vs. 13.4% a year ago, driven by operating efficiencies and cost/resource optimization .
    • Product and platform expansion: Launch of Yext Social and expanded AI Review Generation broadened the platform and resonated with customers seeking consolidation and AI tooling .
    • Strategic positioning: Management emphasized AI-led search fragmentation as a secular tailwind for Yext’s structured data and distribution capabilities; customer conversations center on preparing for multi-endpoint search .

  • What Went Wrong

    • GAAP profitability impacted by acquisition costs: Q3 GAAP EPS $(0.10), with $14.5M acquisition-related costs and $3.5M amortization added back in non-GAAP metrics .
    • Direct ARR trend stable-to-soft ex-Hearsay: CFO noted direct ARR, excluding Hearsay’s $62.8M, was modestly down sequentially (~$1.5M), reflecting continued renewal optimization and FX .
    • FX volatility: Q3 benefited from FX, but post-10/31 rates drove a Q4 headwind, contributing to a sequentially lower Q4 revenue guide despite underlying stability .

Financial Results

MetricQ3 FY2024Q2 FY2025Q3 FY2025
Revenue ($M)$101.164 $97.887 $113.989
GAAP Diluted EPS ($)$0.00 $(0.03) $(0.10)
Non-GAAP EPS ($)$0.09 $0.05 $0.12
Adjusted EBITDA ($M)$13.514 $9.787 $23.094
Adjusted EBITDA Margin (%)13.4% 10.0% 20.3%
GAAP Gross Margin (%)78.2% —77.0%
Non-GAAP Gross Margin (%)78.9% —79.4%

Notes:

  • Non-GAAP add-backs in Q3 FY25 included stock-based comp ($12.7M), acquisition-related costs ($14.5M), and amortization of acquired intangibles ($3.5M); tax adjustment $(2.2)M .
  • Management attributed the seemingly lower Q4 revenue guide vs. Q3 to FX reversal post-quarter end, not to core demand .

Vs. Estimates

  • S&P Global consensus for Q3 FY2025 revenue and EPS was unavailable via our tool at the time of analysis; as a result, we cannot provide a vs-consensus comparison. We default to S&P Global for estimates when available.

Segment/Contribution Highlights

ItemQ3 FY2025
Hearsay Revenue ($M)$16.4
Hearsay ARR Contribution ($M)$62.8

KPI and Balance Indicators

KPIQ3 FY2024Q2 FY2025Q3 FY2025
Total ARR ($M)$396.826 $381.753 $441.795
Direct ARR ($M)$326.625 $313.392 $374.502
Reseller ARR ($M)$70.201 $68.361 $67.293
Dollar-Based Net Retention – Total96% 91% 91%
Dollar-Based Net Retention – Direct97% 91% 91%
Dollar-Based Net Retention – Reseller95% 94% 93%
RPO ($M)——$457.1
Unearned Revenue ($M)$144.5 (as of 10/31/23) $156.2 (as of 7/31/24) $160.9 (as of 10/31/24)
Cash, Cash Eq. & Restricted Cash ($M)$182.2 (as of 10/31/23) $234.8 (cash eq., as of 7/31/24) $118.0 (as of 10/31/24)

Additional product updates during Q3 FY2025 period:

  • Launched Yext Social (AI-powered social media management) .
  • Expanded AI Review Generation to third-party sites (Google, Facebook, 80+ networks) .
  • Completed acquisition of Hearsay Systems (Aug 1, 2024) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q4 FY2025N/A$112.4 – $112.9 New
Adjusted EBITDA ($M)Q4 FY2025N/A$24.5 – $25.0 New
Non-GAAP EPS ($)Q4 FY2025N/A$0.12 – $0.13 New
Revenue ($M)FY2025$420.0 – $421.0 $420.3 – $420.8 Narrowed/Maintained
Adjusted EBITDA ($M)FY2025$66.0 – $67.0 $67.0 – $67.5 Raised
Non-GAAP EPS ($)FY2025N/A$0.35 – $0.36 New/Specified

Management notes FX as a key driver of Q3 upside and Q4 headwind embedded in guidance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1–Q2 FY2025)Current Period (Q3 FY2025)Trend
AI/search fragmentationCautious on near-term AI bookings; long-run value via data/workflows; preparing for AI-enabled search Core customer conversation; brands preparing for multi-endpoint, conversational search; Yext’s structured data distribution seen as differentiator Building momentum/awareness
Hearsay integration & synergiesDeal closed 8/1; revenue synergies expected over time; similar sales cycles; margin mix initially dilutive Q3 Hearsay revenue $16.4M; ARR +$62.8M; integration “largely complete” by year-end; strong joint customer resonance Executing; synergy ramp ahead
FX & sequential dynamicsNoted volatility; guided to consolidated low-20s EBITDA margin exit-year Q3 FX benefit; Q4 FX headwind explains sequential revenue guide; EBITDA margin to expand further in Q4 FX a near-term swing factor
Reseller usage-based shiftMoving from committed to usage-based to unlock growth; ARR optics vs. revenue Continued shift; slight reseller revenue decline vs. Q2 driven by timing; focus on usage growth Transition ongoing
Retention/ARR stabilityManaging renewals to reduce churn/downgrades; cautious on ARR acceleration timing Slight sequential direct ARR softness ex-Hearsay; 3 straight quarters of improvement in gross/net retention and renewals (qualitative) Stabilizing, early improvements
Rule of 40 focusTargeting Rule of 40 via margin efficiency and growth levers “Much closer” now; more contribution from growth ahead, but margin runway remains Progressing

Management Commentary

  • “Our revenue grew 13% year-over-year with the inclusion of Hearsay Systems… We’re a much more efficient business today… increasingly focused on accelerating growth.” – CEO Mike Walrath .
  • “Hearsay revenue in Q3 was $16.4 million… Hearsay ARR at the end of Q3 was about $62.8 million… legacy Yext revenue is pretty stable as well.” – CFO Darryl Bond .
  • “The confusing sequential nature of the revenue in Q3 and the guide in Q4 is FX related… upside in Q3, downside in Q4; wash out shows stability.” – CEO Mike Walrath .
  • “We are in the early stages of a return to a much more fragmented consumer question and answer environment… Yext is ideally positioned to help our customers navigate this new complexity.” – Shareholder letter .

Q&A Highlights

  • AI/search fragmentation: Customers seek strategies to structure and distribute content across multiple generative search endpoints; Yext sees rising engagement on this topic with decision-makers .
  • Hearsay update: No negative surprises; integration progressing; financial services compliance needs support resilient demand; joint customer conversations highlight unified data/workflow value .
  • FX and Q4 guide: Q3 FX tailwind switched to Q4 headwind; deal timing late in Q4 minimally impacts revenue; guidance remains conservative .
  • Reseller strategy: Shift toward usage-based pricing can dampen ARR optics while keeping revenue stable; flexibility intended to unlock broader opportunities .
  • ARR/retention: Slight sequential direct ARR decline excluding Hearsay; three straight quarters of improvement in retention and renewal rate (qualitative) .

Estimates Context

  • We attempted to pull S&P Global consensus for Q3 FY2025 revenue/EPS but it was unavailable via our tool at the time of analysis; therefore, we cannot provide a vs-consensus comparison. We default to S&P Global for estimates when available.

Key Takeaways for Investors

  • Margin engine working: Adjusted EBITDA margin expanded to 20.3% in Q3; management guides further margin improvement in Q4, supporting a credible Rule-of-40 trajectory over time .
  • Growth optionality: Hearsay contributions (revenue and ARR) plus Yext Social and AI Review Generation expand TAM and cross-sell vectors, with early signs of positive customer reception .
  • Near-term optics vs. fundamentals: Q4 revenue guide reflects FX headwinds more than demand; underlying revenue and ARR are characterized as “stable” exiting the year .
  • Pipeline and renewals: Ongoing renewal discipline prioritized long-term relationships; qualitative improvements in retention and renewal momentum suggest foundation for ARR re-acceleration as macro stabilizes .
  • AI/search fragmentation: Yext’s structured data platform and distribution network position it as an enabler across emerging generative search endpoints—an emerging secular tailwind .
  • Watch items: FX volatility, integration execution, reseller usage transition optics, and timing of organic ARR re-acceleration .
  • Trading lens: Profitability beats and credible margin expansion guide can be supportive; acceleration proof points (ARR growth, net retention uptick, Hearsay cross-sell) likely to drive multiple re-rating.