Online reputation and search platform Yext (NYSE:YEXT) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 11.9% year on year to $113.1 million. Its non-GAAP profit of $0.12 per share was 9.4% below analysts’ consensus estimates.
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Yext (YEXT) Q4 CY2024 Highlights:
- Revenue: $113.1 million vs analyst estimates of $112.8 million (11.9% year-on-year growth, in line)
- Adjusted EPS: $0.12 vs analyst expectations of $0.13 (9.4% miss)
- Adjusted EBITDA: $24.56 million vs analyst estimates of $24.84 million (21.7% margin, 1.1% miss)
- Operating Margin: -8%, down from 1% in the same quarter last year
- Free Cash Flow was $38.03 million, up from -$16.37 million in the previous quarter
- Market Capitalization: $843.6 million
Company Overview
Founded in 2006 by Howard Lerman, Yext (NYSE:YEXT) offers software as a service that helps their clients manage and monitor their online listings and customer reviews across all relevant databases, from Google Maps to Alexa or Siri.
Listing Management Software
As the number of places that keep business listings (such as addresses, opening hours and contact details) increases, the task of keeping all listings up-to-date becomes more difficult and that drives demand for centralized solutions that update all touchpoints.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Yext’s sales grew at a weak 2.5% compounded annual growth rate over the last three years. This was below our standards and is a tough starting point for our analysis.
This quarter, Yext’s year-on-year revenue growth was 11.9%, and its $113.1 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 7.4% over the next 12 months. While this projection suggests its newer products and services will spur better top-line performance, it is still below the sector average.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
Yext’s recent customer acquisition efforts haven’t yielded returns as its CAC payback period was negative this quarter, meaning its incremental sales and marketing investments outpaced its revenue. The company’s inefficiency indicates it operates in a highly competitive environment where there is little differentiation between Yext’s products and its peers.
Key Takeaways from Yext’s Q4 Results
We struggled to find many positives in these results. Revenue was just in line while EPS missed. Overall, this quarter could have been better. The stock traded down 5.4% to $6.20 immediately following the results.
Yext didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
