What happened

Shares of cloud-based information company Yext (YEXT 0.36%) are rocking and rolling Wednesday morning, up a shocking 44.2% through 11:30 a.m. ET after the company beat analyst expectations in its first-quarter earnings report last night.

Heading into the quarter, analysts had forecast that Yext would have earnings per share (EPS) of only $0.05, adjusted for one-time items, on sales of $98.6 million. Instead, it had EPS of $0.09, and sales came in at $99.5 million.  

So what

So Yext beat on earnings. The real question for investors today, though, is whether the beat was by a big enough margin to justify the stock's sharp run-up in price. And that is very much up for debate.  

While sales exceeded estimates, they still grew only 1% year over year, despite Yext growing its customer base by 5%. And although the company had a bigger-than-expected adjusted profit, earnings as calculated according to generally accepted accounting principles (GAAP) were just breakeven. (And the total net loss was about $400,000.)

Now what

Investors might have been less excited by the first-quarter results, and more by what it said about the future. Calling the quarter "a strong start to the year," CEO Michael Walrath forecast sequential revenue growth to roughly $102 million.

And Walrath made sure to mention the magic words "artificial intelligence" (AI), to gin up investor excitement. He said Yext "is ideally positioned to help enterprises use generative AI, search, content management."

That $102 million projection would be more than the $100.1 million that Wall Street has forecast for this quarter, and Yext thinks EPS could reach $0.06 or $0.07 this quarter, versus the $0.05 the Street is expecting.

That being said, 2.5% growth isn't a lot, and $0.06 or $0.07 per share would be a sequential decline in adjusted earnings. (Yext made no promises about earning a GAAP profit.) For the time being, however, investors seem willing to overlook these quibbles.

Yext beat earnings. Yext raised guidance. And Yext called itself an AI company. That seems good enough for now.