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Why Yext Stock Was Slammed on Friday

By Daniel Sparks – Sep 3, 2021 at 1:24PM

Key Points

  • The tech company's fiscal second-quarter revenue was about $3 million above analyst expectations.
  • Yext's fiscal third-quarter guidance missed the mark on one key metric.
  • Its customer accounts increased 23% year over year to more than 2,600.

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Shares were down despite the company reporting better-than-expected revenue and adjusted EPS for its fiscal second quarter.

What happened

Shares of cloud-based software company Yext (YEXT -0.10%), which helps companies improve search data, fell sharply on Friday. At the tech stock's worst point during the trading day, shares were down more than 15%. But as of 12:30 p.m. EDT today, the stock was down 9.7%.

The stock's decline follows Yext's fiscal second-quarter earnings report, which included better-than-expected revenue and adjusted earnings per share. Guidance, however, was underwhelming compared to analyst expectations.

A chalkboard sketch of a chart showing a stock price falling.

Image source: Getty Images.

So what

Yext announced revenue of $98.1 million, up 11% year over year. The adjusted loss per share for the period was $0.06. Analysts on average were expecting revenue of $95 million and an adjusted loss per share of $0.07. 

Guidance, however, wasn't as impressive. The company said it expects fiscal third-quarter revenue to be between $97.5 million and $98.5 million. The midpoint of this range would notably represent a slight sequential decline, though this guidance was ahead of a consensus analyst forecast for $97.2 million.

But management's guidance for a fiscal third-quarter adjusted loss per share between $0.06 and $0.08 was worse than the narrower consensus analyst estimate for $0.05. 

For the full year, management guided for revenue to be between $386 million and $388 million (slightly ahead of a consensus analyst forecast of about $385 million) and an adjusted loss per share between $0.20 and $0.24 (worse than the $0.18 expected by analysts). 

Now what

Despite the company's underwhelming guidance, management remains optimistic, noting that its fiscal second-quarter momentum benefited from both new customers and upsells. Looking ahead, CEO Howard Lerman said in the company's earnings release that Yext "continues to be a critical partner for businesses by driving operational efficiencies, especially within marketing and support." He added that the company's "AI-powered search platform helps create a seamless online experience at every stop in the customer journey."

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool recommends Yext, Inc. The Motley Fool has a disclosure policy.

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