Q1 2026 Yext Inc Earnings Call

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Unknown Executive: Good afternoon and welcome to the Yext Incorporated's first quarter fiscal 2026 financial results conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Good afternoon, and welcome to the Yexed incorporated first quarter fiscal 'twenty 'twenty six financial results Conference call. All participants will be in listen only mode should you need assistance. Please signal.

Specialist by pressing the star key followed by zero.

Unknown Executive: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To draw your question, please press star then 2. Please note, this event is being recorded.

After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad.

To withdraw your question. Please press Star then two.

Please note this event is being recorded.

Unknown Executive: I would now like to turn the conference over to Nils Erdmann. Please go ahead.

Speaker Change: I would now like to turn the conference over to Nils Erdmann. Please go ahead.

Speaker Change: Yeah.

Michael Wallrath: Thank you operator, and good afternoon, everyone. Welcome to yes, the first quarter of fiscal 2026 earnings Conference call with me today are CEO and chair of the board Michael Wallrath N CFO Darryl bond.

Nils Erdmann: Thank you, Operator, and good afternoon, everyone. Welcome to Yext's first quarter Fiscal 2026 Earnings Conference Call.

Michael Walrath: With me today are CEO and Chair of the Board, Michael Walrath, and CFO, Darryl Bond. During this call, we will make forward-looking statements, including statements related to our future financial performance, statements regarding the expected effects of our recent acquisitions, expectations regarding the growth of our business, our outlook for the second quarter and full year Fiscal 2026, our strategy, and estimates of financial and operating metrics, capital expenditures, and other indications of future opportunities, as further described in our first quarter shareholder letter, which is available at investors.yext.com. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to Yext's growth, the evolution of our industry, our product development and success, our ability to integrate acquired businesses with ours, our management performance, and general economic and business conditions.

Michael Wallrath: During this call we will make forward looking statements, including statements related to our future financial performance statements regarding the expected effects of our recent acquisitions expectations regarding the growth of our business our outlook for the second quarter and full year fiscal 2026, our strategy and estimates of financial and operating metrics capital expenditures and other indications.

Michael Wallrath: Future opportunities as further described in our first quarter shareholder letter, which is available at investors Dot Yexed Dot com.

Michael Wallrath: These forward looking statements are subject to certain risks uncertainties and assumptions, including those related to excess growth the evolution of our industry, our product development and success, our ability to integrate acquired businesses with ours or management performance and general economic and business conditions. These forward looking statements represent our beliefs and assumptions only as of the date made and we undertake no obligation to.

Michael Walrath: These forward-looking statements represent our beliefs and assumptions only as of the date made, and we undertake no obligation to revise or update any statements to reflect changes that occur after this call. Further information on factors and other risks that could cause actual results to materially differ from these forward-looking statements is included in our reports filed with the SEC, including in the sections titled Special Note Regarding Forward-Looking Statements and Risk Factors, and our most recent annual report on Form 10-K for the year ended January 31, 2025, and in our earnings release and our shareholder letter that were both issued this afternoon.

Michael Wallrath: Revise or update any statements to reflect changes that occur. After this call further information.

Michael Wallrath: On factors and other risks that could cause actual results to materially differ from these forward looking statements is included in our reports filed with the SEC, including in the sections titled Special Note regarding forward looking statements and risk factors in our most recent annual report on Form 10-K for the year ended January 31, 2025, and in our earnings release and our shareholder.

Michael Wallrath: Letter that were both issued this afternoon during.

Michael Walrath: During the call, we refer to certain metrics, including non-GAAP financial measures. Definitions of these non-GAAP metrics and other operating metrics, as well as reconciliations with the most comparable historical GAAP measures, are available in the shareholder letter.

Michael Wallrath: During the call, we refer to certain metrics, including non-GAAP financial measures definitions of these non-GAAP metrics and other operating metrics as well as reconciliations with the most comparable historical GAAP measures are available in the shareholder letter.

Michael Walrath: I will now turn the call over to Mike. Thanks, Nils, and thank you all for joining us today. As I hope you read in our shareholder letter and earnings release, we had a very strong Q1, outperforming our guidance on all metrics, and we see continued strength into Q2.

Mike: I will now turn the call over to Mike.

Mike: Thanks, Bill and thank you all for joining us today.

Mike: As I hope you read in our shareholder letter and earnings release, we had a very strong Q1 outperforming our guidance on all metrics and we can and we see continued strength into Q2.

Michael Walrath: A few things I'd like to highlight before we dive into your questions. First, fragmentation of the consumer search market continues to accelerate with the advancement of AI search. This trend elevates the importance for brands of managing digital visibility and it differentiates Yext's core products and provides fertile ground for our latest product release, YextScout. Second, for business health is improving. We're seeing improvement in both gross and net retention, customer satisfaction, and overall value perception across our platform. Third, the pace of innovation is advancing rapidly at Yext. We are speeding up our execution, even as our profitability and efficiency grow, setting the table for a growth flywheel well into the future.

Mike: A few things I'd like to highlight before we dive into your questions.

Mike: First a fragmentation of the consumer search market continues to accelerate with the advancement of AI search.

Mike: This trying to elevate the importance for brands of managing digital visibility and it differentiates yex core products and provides fertile ground for our latest product release, yes scout.

Mike: Second our core business health is improving.

Mike: We're seeing improvement in both gross and net retention customer satisfaction and overall value perception across our platform.

Mike: Third the pace of innovation is advancing rapidly we are speeding up our execution, even as our profitability inefficiency grow setting the table for a growth flywheel well into the future.

Mike: And finally, we have the balance sheet and cash flow further accelerate our growth while maintaining flexibility.

Michael Walrath: And finally, we have the balance sheet and cash flow further accelerate our growth while maintaining flexibility. This enables us to strategically reinvest in organic initiatives and pursue opportunistic investments, whether through M&A or partnerships that extend and enhance our business. I'm thrilled with the execution of our global team, who are bringing strong commitment to driving value. for our customers, even as the pace of change in our industry accelerates.

Mike: This enables us to strategically reinvest in organic initiatives and pursue opportunistic investments whether through M&A or partnerships that extend and enhance our business.

Mike: I'm thrilled with the execution of our global team, who are bringing strong commitment to driving value.

For our customers, even as the pace of change in our industry accelerates.

Mike: And now we're happy to take any questions that you may have for us.

Unknown Executive: And now we're happy to take any questions that you may have for us. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our.

Mike: Foster.

Speaker Change: The first question is from David Kahn with B Riley Securities. Please go ahead.

Naved Khan: The first question is from Naved Khan with B-Riley Securities, please go ahead. Great. Thank you very much. A couple of questions from me.

Mike: Right.

David Kahn: Thank you very much a couple of questions for me, maybe just one on the on the Scout update it's good to see the the basic list are up to a 1000 customers.

Naved Khan: Maybe just one on the Scout update. It's good to see the wait list up to 1,000 customers. And I'm curious about the mix here in terms of are you, you know, besides the interest from existing customers, are you also seeing a good number of new customers sign up for this product? And maybe as a related question, as you start to see sort of more sales traction, how are you thinking about increasing sales headcount for the rest of the year?

David Kahn: And I'm curious about the mix here in terms of Ah Ah you know besides the interest from existing customers.

David Kahn: A good number of new customers sign up for this product and maybe as a.

David Kahn: As a related question.

David Kahn: As you start to see.

David Kahn: The sort of more satisfaction.

David Kahn: How are you thinking about increasing sales head count.

David Kahn: For the rest of the year.

David Kahn: Okay great.

Michael Walrath: Hey, Naved. As far as the customers go, I think what we're seeing on the wait list is a mix. So we see existing customers, we also see new prospects, and we also see brand customers. So all of the above there, and that's driven by some of the demonstrations that we've had available for scouts since early April. As far as the sales headcount goes, I think we have room to run with our current headcount. I think we have opportunities to grow productivity, but we're going to continue to look at the demand universe, the market, and determine when the right time is to add additional headcount.

David Kahn: As far as the customers go I think what we're seeing on the waitlist is a mix. So we see new we see existing customers we see.

Michael Walrath: We also see new prospects.

David Kahn: We also see end customer so it sort of.

David Kahn: All of the above there and that's driven by some of the debt.

Demonstrations that we've had available for scouts since early April.

David Kahn: As far as the sales head count goes I think we have room to run with our current head count I think we have opportunities to grow productivity, but we're going to continue to look at the at.

David Kahn: The demand universe, the market and determine when it right.

David Kahn: When the right time is to add additional head count.

Michael Walrath: And we'll be opportunistic there because we're seeing plenty of positive signal, but we want to make sure that all of our sales folks have plenty of opportunity and that we don't get ahead of ourselves on that front.

David Kahn: And it will be you know a.

David Kahn: Opportunistic there because we're seeing plenty of positive signal.

David Kahn: But we want to make sure that all of our sales folks have plenty of opportunity and that we don't get ahead of ourselves on that front.

David Kahn: Got it and then maybe just staying on the and on schedule with maybe.

Unknown Executive: Got it.

Naved Khan: And then maybe just staying on the, you know, on Scout, maybe, maybe just talk about the velocity in terms of, you know, customers kind of, you know, of the sales cycle, maybe shortening or not. And how should we be thinking about the product kind of becoming generally available to all the customers? How are you thinking about the timeline?

David Kahn: Maybe just talk about the velocity in terms of our customers kind of.

David Kahn: The sales cycles maybe.

David Kahn: Shortening or not and how long they've been thinking about the product and are becoming generally available to all the customers. How are you thinking about the timeline. Thanks.

David Kahn: Yeah. So.

Michael Walrath: Yeah, so I, you know, I think it's too early to say with any, you know, sort of certainty what the sales cycle will look like for this product. From what I can tell so far, I would expect that if anything, the sales cycle will be a bit shorter. It's an easier implementation. The core data is publicly available. And I think the value that our customers see, especially in light of what's going on in the market, and the need to really understand the visibility around their brand with the rapid fragmentation that we're seeing, all of those things, you know, encourage me that this could, you know, be a shorter sales cycle product for most customers.

David Kahn: I think it's too early to say with any sort.

David Kahn: Sort of certainty what the sales cycle will look like for this products from what I can tell so far I would expect that.

David Kahn: If anything the cell cycle will be a bit shorter.

David Kahn: It's an easier implementation.

David Kahn: The core data is publicly available.

David Kahn: And I think the the value that our customers see especially in light of what's going on in the market and the need to really understand that visibility around there. There are there brands with the rapid fragmentation that we're seeing all of those things you know encourage me that this could be a shorter sales cycle product for.

Michael Walrath: As far as the role, and look, I think that's reflected in the speed with which we've rolled the product out. So just as a reminder, we launched this product officially at our analyst day on April 2. That initial cohort was, you know, less than 10 development partners who we've been working with in advance of the, what I would call a more open beta as of yesterday. So there were an incremental, I believe it was 37 customers rolled out over the course of the last 48 hours or so. And so I would describe where we are today with the product as an open beta that will be incrementally rolling out additional customers as we get those beta customers lined up.

David Kahn: For most customers.

David Kahn: As far as the ROE and it looked at I think that's reflected in the speed with which we've rolled the product out. So just as a reminder, we launched this product.

David Kahn: Officially at our analyst day on April 2nd.

David Kahn: That initial cohort was you know less than 10 development partners, who we've been working with them in advance of the what I would call it more open data.

David Kahn: As of yesterday. So there are incremental I believe it was 37 customers rolled out.

David Kahn: Over the course of the last 48 hours or so.

David Kahn: And so so I would describe where we are today with the product as a as an open beta that will be <unk>.

David Kahn: Incrementally rolling out additional customers.

David Kahn: As a as we get those those customer those beta customers lined up we don't have a date yet for when we'll go full general availability, but I'm really confident that we have the capacity to roll out a lot of customers here.

Michael Walrath: We don't have a date yet for when we'll go full general availability, but I'm really confident that we have the capacity to roll out a lot of customers here.

David Kahn: Yeah.

Unknown Executive: Great. Thanks, Mike. I'll get back in the queue. Thanks, David.

Speaker Change: Great. Thanks, Mike I'll get back in the queue.

David Kahn: Thanks, David.

Ryan Macdonald: The next question is from Ryan MacDonald with Needham & Company. Please go ahead. Congrats on a great quarter, really strong results and, you know, a lot of positive momentum. Mike, it seems like that, you know, from reading the shareholder letter and hearing you speak right now, there's a lot of good things going on in the business, great Q1, good momentum to Q2, you know, scouts obviously seeing some really nice demand, you know, hearsay, social, etc. But yet we still don't have a sort of full year top line outlook yet.

Speaker Change: The next question is from Ryan Macdonald with Needham <unk> Company. Please go ahead.

Ryan Macdonald: Hi, Congrats on a great quarter really strong results in a you know a lot of positive momentum Mike. It seems like that you know from reading the shareholder letter in hearing you speak right now there's a lot of good things going on in the business Great Q1, good momentum into Q2 Scouts, obviously seeing some really nice demand you know hearsay social.

Ryan Macdonald: Et cetera, but yet we're still don't have a sort of a full year topline outlook. Yet I'm. Just curious can you help us understand sort of how you're balancing sort of the enthusiasm and the momentum in the business right now versus maybe what youre seeing in the macro and sort of what's kind of creating the lingering caution if you will.

Michael Walrath: I'm just curious, can you help us understand sort of how you're balancing sort of the enthusiasm and the momentum in the business right now versus maybe what you're seeing in the macro and sort of what's kind of creating the lingering caution, if you will? Yeah, no, look, it's I think the lingering caution is is Two things, but probably primarily the macro, right? So, you know, it was interesting, you know, I think, I think, you know, I listened to all the software calls and, you know, I thought it was interesting to listen to the March, how the March quarters and the April quarters, you know, potentially sounded a little bit different.

Speaker Change: Yeah, No look it's I think the lingering caution as is.

Speaker Change: Two things would probably primarily the macro right. So.

Speaker Change: It was interesting I think I think.

Speaker Change: I listen to all.

Speaker Change: The software calls in.

Speaker Change: I thought it was interesting to listen to the March saw the March quarter's in the April quarters.

Speaker Change: You sounded a little bit different.

Michael Walrath: You know, while we don't have any direct impact in our business from tariffs and things like that, we are obviously well aware that, you know, businesses who do are thinking carefully about how they're, you know, expending dollars. At the same time, I think there's a competing tailwind here, which is, you know, it's not really deniable anymore that the brand discovery landscape is shifting enormously. We saw Google dip below 90% market share recently for the first time in a very long time. And candidly, that's not the best measure for two reasons. One is the, that's really only measuring traditional search.

Speaker Change: You know, while we don't have any direct impact on our business from tariffs and things like that we are obviously well aware of the businesses. You do are thinking carefully about how their you know extending dollars at the same time I think there's a competing tailwind here, which as.

Speaker Change: You know, it's it's not really deniable anymore that the brand discovery landscape is shifting enormously we.

Speaker Change: We saw Google dipped below 90% market share recently for the first time in a very long time.

Speaker Change: And candidly that's not the best measure because for two reasons one is the.

Speaker Change: It's really only measuring traditional search and the second is that you.

Michael Walrath: And the second is that, you know, the fragmentation that's happening here isn't a zero sum game. So we think the fragmentation drives more search, not less search. So all of those things, I think, factor into the puts and takes around feeling really positive on the fact that this environment is very fertile for us. The commoditization pressure that we've talked about for years in our product, you know, abates in a market where having the best digital visibility, brand visibility products is going to drive value perception. But we're always going to be mindful of the fact that there's a lot of uncertainty around the macroeconomic landscape.

Speaker Change: You know the the fragmentation that's happening here isn't a zero sum game. So we think the fragmentation drives more search not lesser so all of those things I think factor into the puts and takes around feeling really positive on the fact that this environment is it is very fertile for us the the.

Speaker Change: Commoditization pressure that we've talked about for years in our product.

Speaker Change: You know abates in a market, where having the best digital visibility our brand visibility products is going to is going to drive value perception.

Speaker Change:

Speaker Change: But we're always going to be mindful of the fact that there's a lot of uncertainty around the macro economic landscape and so you know I think our overall outlook, we will remain conservative as long as that uncertainty exists.

Michael Walrath: And so, you know, I think our overall outlook, you know, will remain conservative as long as that uncertainty exists. Helpful color.

Speaker Change: Helpful color, maybe on scout in the Beta program I'm, just curious on what you're looking for within customers that have launched.

Ryan Macdonald: Maybe on Scout in the beta program, I'm just curious, what you're looking for within customers that have launched in the beta or from the development customers thus far? Are there any sample data points in terms of ROI generation that you can talk about?

Speaker Change: Launched in the beta or from the development customers. So far thus far are there any sample data points in terms of ROI generation that you can talk about and then maybe perhaps based on what Youre seeing you know based on maybe the value you're seeing being delivered in the early days of Scout is this evolving how you're thinking about monetization.

Michael Walrath: And then, you know, maybe perhaps based on what you're seeing, you know, or based on maybe the value you're seeing being delivered in the early days of Scout, is this evolving how you're thinking about monetization of the product, when it eventually is generally available later this year? Yeah, so, I mean, I look, I think the development partner, you know, relationship is a little different than these initial beta launches. So, the development partners are signing up for a product, you know, to experiment with a product that is not ready for a public launch. The launch that we've had over the last 48 hours is a, is really a public beta launch.

Speaker Change: <unk> of the product when it eventually is generally available later this year or next year.

Speaker Change: Yeah. So I mean, I look I think the a development partner.

Speaker Change: Relationship is a little different than these initial beta launches. So the development partners are signing up for our product.

Speaker Change: The experiment with a product that is not ready for a public launch the launch that we've had.

Speaker Change: <unk> had over the last 48 hours is a it's really a public beta launch and so we've been gating that we're controlling how many customers are launched but.

Michael Walrath: And so, we've been We're controlling how many customers are launched. But, you know, but sitting today with, you know, something like 45 live customers, we're getting amazing feedback from the customers. I've personally sat through, you know, dozens, many dozens of customer interviews and customer meetings, both demonstrations, but then also customers who are actively using the product. You know, I can tell you that so far, there's a 0% disinterest rate in the product. And there's very high value perception, both around the product, but also around, you know, how it demonstrates value of our other core existing products.

Speaker Change: But sitting today with with you know something like 45 live customers, we're getting amazing feedback from the customers.

Speaker Change: I've personally sat through dozens many dozens of customer interviews and customer meetings. Both demonstrations, but then also customers who are actively using the product are you know I can tell you that so far theres, a zero percent disinterest right and the product and Theres, a very high value perception, both around the product but also.

Speaker Change: Around how it demonstrates the value of our other core existing products. So we talk a lot about scout has over 150 nonperformance metrics that we're able to gather big chunks of those metrics are things around how are you distributing your listings information to create citations both for traditional search and AI search you're.

Michael Walrath: So, we talk a lot about Scout has over 150 non-performance metrics that we're able to gather. Big chunks of those metrics are things around how are you distributing your listings information to create citations, both for traditional search and AI search, your page performance, your review performance, reputation performance. And so, when we start demonstrating at the location level to our customers, how those metrics are contributing, you know, any questions about the value of our listings product or our reviews product or our pages product or our social product, they start to fall by the wayside because you can see that that is the thing that differentiates you.

Speaker Change: Page performance your review performance reputation performance and so when we when we started when we start demonstrating at the location level to our customers how those metrics are contributing.

Speaker Change: Any questions about the value of our listings product or our reviews products or our pages product or social product. They started to fall by the wayside because you can see that that is the thing that differentiates you and you can see how you're outperforming your competition because of those things. So when I talk about you know kind of.

Michael Walrath: And you can see how you're outperforming your competition because of those things. So, when I talk about, you know, kind of… Maybe the earliest benefit of the product is the anti-commoditization pressure of our core products against what we've seen is, you know, pressure from a lot of small competitors with less capable products. That's probably the earliest benefit.

Speaker Change: Maybe the earliest benefit of the product is the anti commoditization pressure of our core products against what we've seen is pressure from a lot of small competitors with less capable products.

Speaker Change: That's probably the earliest benefits.

Michael Walrath: The secondary or maybe the more important benefits of the long run are the TAM expansion and the attachment opportunity with Scout as a standalone product.

Speaker Change: Secondary there than maybe the more important benefits over the long run or the Tam expansion and the attachment opportunity with scout as it as a standalone product.

Speaker Change: It's exciting to hear and I can't wait to hear more thanks.

Ryan Macdonald: It's exciting to hear and I can't wait to hear more. Thanks. We'll stop. Thanks Ryan.

Speaker Change: Right.

Speaker Change: The next question is from Tom White with D. A Davidson. Please go ahead.

Tom White: The next question is from Tom White with D.A. Davidson. Please go ahead. Great. Thanks for taking my questions, too, if I could. I was hoping you guys could just give a bit more color on the drivers of the revenue outperformance in the first quarter. And, you know, I guess specifically, the direct ARR improved sequentially there by a few million bucks, I think.

Tom White: Oh, great. Thanks for taking my questions two if I could.

Speaker Change: Was hoping you guys could just give a bit more color on the on the drivers of the revenue outperformance in the first quarter and.

Speaker Change: Specifically the direct <unk> improved sequentially there by a few million Bucks I think.

Darryl Bond: Maybe talk a little bit about the extent to which it was sort of legacy product-driven versus some of your newer offerings versus maybe some of the recent M&A, like Hearsay. And then just secondly, on the buyback, I think that kind of the pace of buybacks picked up in the quarter versus kind of the cadence of that. past couple.

Speaker Change: Maybe talk a little bit about the extent to which it was sort of legacy product driven versus.

Speaker Change: Some of your newer offerings versus maybe some of the recent M&A like hearsay and then just secondly on.

Speaker Change: And on the buyback I think that the kind of the pace of buybacks ticked up.

Speaker Change: In the quarter versus kind of the cadence of that.

Speaker Change: Past couple.

Darryl Bond: Maybe you might just talk about like your appetite to focus on, you know, reducing the share count here, potentially, just given the strong cash flow, you know, the improved liquidity after this debt deal, like, where is the buyback kind of ranking with your other kind of opportunities or things you're thinking about?

Speaker Change: Can you maybe just talk about like your appetite to focus on reducing the share count here potentially just given the strong cash flow.

Speaker Change:

Speaker Change: The improved liquidity after this debt deal like Where's the buyback kind of ranking with your other.

Speaker Change: Kind of opportunities just ensure thinking about thanks.

Speaker Change: Thanks Daryl.

Darryl Bond: Thanks, Darryl. On the revenue and the ARR performance in Q1, you know, it was a couple things, you know, one, we did see a bit of a tailwind from FX rates, you know, if you recall, you know, for the last few quarters, we've been talking about FX headwinds, particularly as it rates to the pound. And that sort of abated and came back. And I think, you know, the rates at the end of Q1 this year are kind of, you know, roughly in line with where they were Q1 of last year. So, that drove, you know, some of the improvement on both the revenue and on the ARR side.

Speaker Change: The revenue in the air our performance in Q1 it was a.

Speaker Change: Couple of things one we did see a bit of a tailwind from FX rates you know if you're if you recall for the last few quarters, we've been talking about FX headwinds, particularly as it relates to the pound and that sort of abated and came back and I think you know the rates at the end of Q1, this year or kind of roughly in la.

Speaker Change: Line with where they were Q1 of last year, so that that drove some of the improvement.

Speaker Change: On both the revenue and on the AOR side, they call we called it out in the shareholder letter in the in the back pages. After their remarks, but we also continue to see improvements in retention.

Darryl Bond: And we called it out in the shareholder letter in the back pages after the remarks. But we also, you know, continue to see improvements in retention. You know, we disclosed gross retention and net retention on the basis of ARR. And, you know, our customer success motion and our ability to, you know, retain customers and drive value to customers continues to show improvement. And that also helps with, you know, obviously the revenue, but also the ARR picture.

Speaker Change: We disclose gross gross retention and net retention on the basis of IRR and our customer success motion and our ability to retain customers and drive value to customers continues to show improvement in that that also helps with.

Speaker Change: Obviously, the revenue, but also the AOR picture.

Darryl Bond: On the buybacks, you know, I'll make a couple comments. But obviously, you know, you saw, you know, where the stock traded throughout Q1. And even at the levels that we're at today, we continue to believe it's a great investment when you look at it from an EBITDA multiple perspective. So, it becomes a really important, you know, tool in our capital allocation belt.

Speaker Change: On the buybacks, yeah, I'll make a couple of comments, but obviously you saw you know where the stock traded throughout Q1 and even at the level of levels that we're at today. We continue to believe it's a great investment when you look at it from an EBITDA multiple perspective, so it becomes a really important tool in our capital allocation.

Michael Walrath: And I'm sure Mike will have some additional comments. Yeah, I think. We're going to look at the buyback as an opportunity to, you know, I think we've, since, you know, over the last three years, I think we've reduced the overall share count. I think we'll continue to look to drive that type of anti-delusion through the business as, especially with the, what we think is the stock price being very attractive. As far as our optionality around buyback versus M&A, it's not necessarily an either-or situation. So we have a really strong balance sheet, we have cash, we have cash flow, and now we have a great partner with BlackRock and a debt facility that would enable us to look at the opportunistic about highly accretive acquisitions.

Speaker Change: Oh belt and I'm sure Mike will have some additional comments yeah.

Speaker Change: I think.

Speaker Change:

Speaker Change: We're going to look at the buyback as an opportunity to you know I think we since you know over the last three years I think we've reduced the.

Speaker Change: Overall share count.

Speaker Change: I think we'll continue to look to to drive that type of anti dilution through the business as especially with the what we think is the stock price being very attractive.

Speaker Change:

Speaker Change: As far as our Optionality around you know buyback versus M&A, it's not necessarily an either or situation. So we have a really strong balance sheet. We have cash we have cash flow and now we have a great partner with Blackrock and a N a.

Speaker Change: And our debt facility that would enable us to look at opportunistic about.

Speaker Change: Highly accretive acquisitions.

Michael Walrath: And so it does feel like we'll continue to be a good time to look at M&A opportunities. But again, I just don't really think that that's necessarily an either-or situation. You can see we did buy a lot of shares in Q1 and we continued to buy shares in May because we gave you the year-to-date, or I guess through the 530 number there. So we feel great about that investment, just as we feel great about the M&A transactions you've had with hearsay and places capped.

Speaker Change: So yes.

Speaker Change: It does feel like it's going to we will continue to be a good time to look at.

Speaker Change: M&A opportunities.

Speaker Change: But I again, I, just don't really think that that's necessarily an either or situation.

Speaker Change: You can see we did buy a lot of shares in Q1, and we continued.

Speaker Change: To buy shares in May because we gave you the year to date, Alright, I guess three to $5 30 number there so.

Speaker Change: Yeah, we feel great about that investment just as we feel great about the M&A transactions, you've had with your staying in place and Scott.

Speaker Change: Got it appreciate that thanks Dara Thanks, Mike.

Unknown Executive: Got it. Appreciate that.

Unknown Executive: Thanks, Daryl. Thanks.

Speaker Change: Again, if you have a question. Please press Star then one.

Unknown Executive: Again, if you have a question, please press star then 1.

Rohit Kulkarni: The next question is from Rohit Kulkarni with Roth Capital Partners, please go ahead. Hey, thanks. A nice quarter, guys. Just on the organic part of the business, net ARR, net retention rate is up. That's a very healthy sign.

Speaker Change: The next question is from Rohit Kulkarni with Roth Capital Partners. Please go ahead.

Rohit Kulkarni: Hey, thanks.

Speaker Change: Thanks Carter.

Speaker Change: Just on the organic part of the business are met.

Nick Griffin: Nick Griffin contributors.

Nick Griffin: That's a very healthy sign any Colorado as to what is driving that is it.

Rohit Kulkarni: Any color on as to what is driving that with regards to upsell or any improvements in GTM that you may have implemented?

Nick Griffin: With regards to upsell O N.

Nick Griffin: Any improvements in G T M.

Nick Griffin: We have implemented and then kind of on the.

Michael Walrath: And then kind of on the org, like I know both companies are now fully integrated, but anything that you can share with regards to the core Yext growth rate, excluding Year C and Scout? Yeah, so I think the first question is a little hard to hear you, Rohit, but I think it was net retention and what's driving it. So I think the good news is we're seeing gross retention and net retention both up. To me, what I observe in the business is I observe, and it's no secret that we've been fighting a lot of good enough at half price for a long time in the business on a lot of our core products, certainly on the listings products primarily.

Nick Griffin: Like I know what company that.

Michael Walrath: Now fully integrated with anything that you can share with you what should be the core <unk> growth.

Nick Griffin: Excluding European scope.

Nick Griffin: Yeah.

Nick Griffin: Yeah. So I think the first question was it's a little hard to hear you right, but I think it was net retention and what's driving it.

Nick Griffin: So I think the good news is we're seeing gross retention and net retention both up to.

Speaker Change: To me, what I observe in the business as I observe that.

Speaker Change: And it's no secret that we've been fighting a lot of.

Speaker Change: Good enough at half price for a long time in the business on a lot of our core products certainly on the listings products primarily.

Speaker Change: I think in this way and I've mentioned this a few times in this world where.

Michael Walrath: I think in this, and I mentioned this a few times, in this world where It's getting harder and harder to manage brand visibility, because you have to go so far beyond just sort of the core, you know, GMB page at this point. That is having an impact in customer value perception across our product. And that's going to be an anti churn metric for us both in terms of logo churn, but also in terms of downgrade churn, because, you know, It's really not going to be an environment where you can afford, where a brand can afford to be missing out on opportunities to generate visibility through proper citation building, through listings, through reputation, social, and all those products.

Speaker Change: It's getting harder and harder to manage brand visibility because you have to go so far beyond just sort of the core you know GMB page at this point.

Speaker Change: That is having an impact in customer value perception across our products and that's going to be an anti churn a metric for us both in terms of logo churn, but also in terms of a downgrade churn because you know.

Speaker Change: It's really not.

Speaker Change: I'm going to be an environment, where you can afford it where our brand can afford to to to be missing out on opportunities to generate visibility through proper citation building through listings through reputation social and all of those products.

Michael Walrath: So we're really encouraged to see that the market is, and our customers are very focused on this, and I think it's helping a lot that we have best-in-class products here and that the value, the perception of value of those best-in-class products are... I think they're getting the attention that they deserve because of the search, the fragmented search environment. I forgot what your second question was. I'm sorry.

Speaker Change: So we're really encouraged its it to see that the market is and our customers are very focused on this and I think it's helping a lot that.

Speaker Change: We have best in class products here and that the value the perception of value of those best in class products our.

Speaker Change: R. R I think theyre getting the attention that they deserve.

Speaker Change: Does have to search the fragmented search environment.

Speaker Change: I forgot what your second question was I'm sorry.

Michael Walrath: Just any other color on the growth in the underlying core Yext business, excluding ERC and Scout? Yeah, I mean, I think we're in a similar place in terms of the stability of that ARR. And What's going to help us, there are two things that are going to help us there, obviously. One is going to be better retention, which we're seeing. And the other is going to be more upsell. And that comes from the opportunity to attach more products. So the way I look at this is, we have, you know, I just described the whole, you know, sort of, I think, value perception of our core, that's going to help a lot with the gross retention situation, especially as we get into our heavier renewal periods, which are always in the back half of the year.

Speaker Change: Just any other color on the growth in the underlying core business excluding.

Speaker Change: See in scope.

Speaker Change: Yeah, I mean I.

Speaker Change: I think we're in a similar place.

Speaker Change: In terms of the stability of that a R. R.

Speaker Change:

Speaker Change: And.

Speaker Change: What's going to help US there are two things that are going help us. There. Obviously, one is gonna be better retention, which we're seeing.

Speaker Change: And the other is going to be.

Speaker Change: More upsell and that comes from the opportunity to attach more products. So the way I look at this is we have you know I just described the whole sort of I think value perception of our core that's going to help a lot with them with the gross retention.

Speaker Change: Situation.

Speaker Change: Especially as we get into our heavier renewal periods, which are always in the back half of the year. So you can move the needle a little bit in the earlier in the first half of the year, but most of it because most of the book winds up being up for renewal in the second half of the year. It becomes really the that's where your where you have the opportunity to really change that math.

Michael Walrath: So you can move the needle a little bit in the earlier, in the first half of the year, but most of the, because most of the book winds up being up for renewal in the second half of the year, it becomes really, though, that's where you have the opportunity to really change that math. And then on the upsell, what you need is you need innovative products that customers value in order to get the upsell and the boomerang customers that drive ultimately the AR growth. So we're encouraged on both of those fronts.

Speaker Change: And then on the on the upsell what you need is you need innovative products that customers value in order to get the the upsell and the boomerang customers that drive ultimately the AOR growth. So.

Speaker Change: We're encouraged on both of those fronts, we're really excited about the customer reception for scout our customers are watching AI disrupt the landscape in which they try to manage their digital visibility and they need AI products like scout that are going to help them to combat the challenges and take advantage of the opportunities of a fragmented digital.

Michael Walrath: We're really excited about the customer reception for Scout. Our customers are watching AI disrupt the landscape in which they try to manage their digital visibility. And they need AI products like Scout that are going to help them to combat the challenges and take advantage of the opportunities of fragmenting digital search landscape.

Speaker Change: Search landscape.

Speaker Change: Okay, Great and I guess, just a just maybe a Y O Y now around this.

Unknown Executive: Okay, great.

Rohit Kulkarni: And I guess just maybe a why or why now around this kind of loan facility that you have from BlackRock, maybe just talk about, you know, there are obvious conclusions one can draw, but we'd love to hear kind of why and why now. Are you seeing any specific kind of urgency in pursuing some growth initiatives that led you to doing it now?

Speaker Change: Kind of loan to somebody that you have oh from Blackrock, maybe just talk about you know.

Speaker Change: Hum.

Speaker Change: I'll just conclusions one can draw but would love to hear.

Speaker Change: Kind of why and why now are you seeing any specific kind of.

Speaker Change: Oh, GNC and are pursuing some growth initiatives.

Speaker Change: But ready to doing it now.

Darryl Bond: Hey Rohit, Darryl. One of the primary reasons was that our facility, our credit facility with SVB was expiring at the end of the calendar year. So we needed to do something because we do leverage that for some availability to collateralize letters of credit with leases and things like that.

Rohit: Yeah, Hey, Rohit so.

Speaker Change: But one of the primary reasons was that our our facility our credit facility with SBB was expiring at the end of the calendar year. So we needed to do something because we do leverage that for some some availability to collateralize.

Michael Walrath: Letters of credit with with leases and things like that but yeah as we got into the conversations with Blackrock. We realize obviously there are really great partner. They are well known they felt really good about our business and we looked at the opportunity and as Mike mentioned with our point of view on the M&A outlook and the opportunities that may arise. It just made sense.

Darryl Bond: But as we got into the conversations with BlackRock, we realized obviously they're a really partner. They're well known. They felt really good about our business. And we looked at the opportunity. And as Mike mentioned, with our point of view on the M&A outlook and the opportunities that may arise, it just made sense for us to do something a little bit bigger.

Speaker Change: For us to do something a little bit bigger than the SPV facility was written years ago right around the time, we did our IPO you know some of the covenants.

Darryl Bond: The SVB facility was written years ago, right around the time we did our IPO. Some of the covenants were meant for a smaller company. So as we got into the conversations, we felt pretty good about the we were getting, about the covenants we were getting, and the flexibility it provides us with some of the things we want to do to continue to invest and grow the business.

Darryl Bond: Covenants were were meant for a smaller company. So as we got into the conversations you know we felt pretty good about the terms we were getting about the covenants, we were getting and the flexibility. It provides us with some of the things we want to do to continue to invest and grow the business.

Michael Walrath: Yeah, the only thing I would add to that, Rohit, is, you know, I think we've done two acquisitions in the last, you know, year, basically, one of those was what we, you know, think is a highly creative, strategic acquisition. And here's the, and obviously Placescout was a smaller, but very strategic, you know, I think product led acquisition. We're really happy with both of those. And we think that the opportunity for more of those exists. We're going to be super diligent, and, you know, and I think very disciplined buyers. But this environment is definitely creating opportunities, just as it's creating organic growth opportunities, it's also creating opportunities for us to consider different assets.

Darryl Bond: Okay.

Speaker Change: The only thing I would add to that ROE you just like us.

Speaker Change: I think we've done two acquisitions in the last you know.

Speaker Change: You're basically one of those was what we think is a highly accretive strategic acquisitions in here.

Speaker Change: And obviously places got was a smaller but very strategic you know I think product led acquisition.

Speaker Change: We're really happy with both of those and we think that the opportunity for more of those exist. We're gonna be Super diligent and you know and I think very disciplined buyers.

Speaker Change: But this environment is definitely creating opportunities.

Speaker Change: Business, creating organic growth opportunities, it's also creating opportunities for us to consider different assets and so.

Michael Walrath: And so, you know, having a facility in place with a partner like BlackRock is just going to make it easier for us to be really, really smart and agile when it comes to those opportunities.

Speaker Change: Having a facility in place with a partner like Blackrock is just going to make.

Speaker Change: Making it easier for us to be really really smart and agile when it comes to those opportunities.

Speaker Change: Okay, Okay anything with the word agent it would definitely help.

Unknown Executive: Okay, okay.

Unknown Executive: Anything with the word agent taking the PR would definitely help. I'm sorry, anything what? in the world, the world having agent take agent take in New York. Oh, yeah, yeah, yeah.

Speaker Change: Good luck.

Speaker Change: And I'm sorry, what.

Speaker Change: In the world the World, having it didn't take you didn't take any Oh, yeah Yep.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Michael Roth for any closing remarks.

Michael Walrath: This concludes our question-and-answer session.

Michael Walrath: I would like to turn the conference back over to Mike Walrath for any closing remarks. I'd like to thank everyone for joining and for all of your support and look forward to speaking with you again next quarter.

Speaker Change: I'd just like to thank everyone for joining in for all of your support and look forward to speaking with you again next quarter.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Unknown Executive: The conference is now concluded. Thank you for attending today's presentation.

Unknown Executive: You may now disconnect. © The Bulletproof Executive 2013

Speaker Change: Yeah.

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Speaker Change: Yes.

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Speaker Change: Okay.

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Speaker Change: Hum.

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Speaker Change: Yeah.

Speaker Change: Yeah.

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Speaker Change: Yeah.