Trimmed forecast arrives after company announced layoffs earlier this month
Shares of Yext Inc. tumbled on Monday after the online-marketing platform trimmed its full-year sales outlook and forecast second-quarter results that were below Wall Street’s expectations, amid what management called a “challenged” environment marked by tighter customer spending.
The company — whose technology helps businesses gain prominence in search results and promote themselves online — delivered the forecast as it makes big cuts to staff and shakes up its leadership in an effort to boost profits and revive its sagging stock price YEXT, -0.20%.
Despite those cuts, Yext said Monday that it would buy Hearsay Systems, a platform that helps the financial-services industry engage customers, for at least $125 million. Earlier this month, Yext said it would lay off around 12% of its full-time staff. That followed layoffs last year and several executive departures in 2022, including that of a company co-founder.
In its guidance, Yext said that it expects full-year fiscal 2025 sales of $394 million to $396 million. That’s a bit less than the $400 million to $402 million it forecast in March.
However, the company boosted its profit forecast and said it expects to report full-year adjusted earnings per share of 35 to 36 cents — better than its outlook in March for 30 to 31 cents.
For the second quarter, Yext forecast revenue of $98 million to $98.4 million, with the midpoint falling below FactSet analyst forecasts for $98.4 million. It expects adjusted earnings per share of 2 to 3 cents, below analyst expectations for 9 cents.
Shares fell 13% after hours.
Yext has attempted to lean into artificial intelligence to make its technology more attractive to customers, and D.A. Davidson analyst Tom White has noted that the company is trying to improve sales and customer satisfaction. Similar to many shoppers, inflation has left businesses cautious on their spending.
“We are all aware of the challenging macro environment that we are currently operating in, which is creating headwinds in the technology industry,” Chief Executive Michael Walrath said in announcing the layoffs earlier this month. “This has translated into longer deal cycles and tougher negotiations as our customers also face difficulties in this environment.”
In Yext’s earnings release Monday, he echoed that sentiment and said the company had focused more on customer support and restructuring its partnerships.
“We also see deals pushed out of Q1 and into either Q2 or, in some cases, the second half of the year,” Walrath said. “Many of our peers have recently noted that enterprise IT buyers remain cautious in their spending, and we are seeing the same trends impact our business.”
He added that Yext had entered into a “new relationship” with a large discount retailer that runs more than 15,000 stores in North America, and that it had brought on four big healthcare providers.
Yext reported a first-quarter net loss of $3.8 million, or 3 cents a share. Adjusted earnings per share came in at 5 cents a share, below FactSet estimates for 6 cents a share. Revenue fell 3% year over year to $96 million, below estimates for $96.3 million.