Shares of Yext (YEXT 3.44%) -- a software company that helps enterprises provide accurate information to the public -- surged on Wednesday after reporting financial results for the fourth quarter of its fiscal 2023. As of 1:30 p.m. EST, Yext stock was up 9%, but it had been up about 14% earlier in the day.
In Q4, Yext generated revenue of almost $102 million, which was up just 1% year over year. But even though growth was meager, it was ahead of management's guidance of $100 million to $101 million.
Last year, Yext's founder and CEO Howard Lerman stepped aside to allow new management to come in -- new management that promised to improve the company's profitability. While it still had losses, the bottom line improved nevertheless.
For fiscal 2023, Yext's operating expenses fell 5% year over year. And operational improvements accelerated in Q4, with operating expenses falling 15% from the prior-year period. The end result was a net loss of $66 million for the year, much improved from its net loss of $93 million in fiscal 2022.
With revenue growth at a crawl and ongoing losses, I'm somewhat surprised at the positive reaction from investors today with Yext stock. The company does have an investor-day presentation coming up on April 4. But it's hard to imagine strong guidance coming from this event, considering management just guided for 1% year-over-year revenue growth at most in fiscal 2024.
I believe the takeaway for Yext investors is the business is stable and management is trying to operate leaner. Therefore, this isn't a dying company. That said, it has a cloudy path to market-beating returns from here, in my opinion.