Yext Reports $111.1 Million Q2 Revenue and 31% Adjusted EBITDA Margin

Yext reported second-quarter fiscal 2027 revenue of $111.1 million, down 2% from $113.1 million a year earlier, while adjusted EBITDA rose 29% to $34.0 million. The improvement lifted the company’s adjusted EBITDA margin to 31%, compared with about 23% in the year-ago quarter, even as revenue declined.

For the three months ended July 31, Yext also posted GAAP net income of $13.1 million, or $0.13 per diluted share, and non-GAAP net income of $21.2 million, or $0.21 per diluted share. Annual recurring revenue finished the quarter at $440.8 million, slightly below the $444.4 million reported a year earlier.

The mix inside that recurring-revenue figure is becoming more important than the overall total. In its September 1 earnings release filed with the SEC, Yext said customers generating at least $50,000 of ARR accounted for $405.9 million, or 92% of total ARR. That cohort grew 2% year over year, while ARR from customers below the $50,000 threshold fell 22% to $34.9 million.

Margin expansion outpaced the revenue line

The clearest change in Yext’s quarter was the widening gap between the revenue trend and profitability. Revenue declined by about $2.0 million from the prior-year period, but adjusted EBITDA increased from $26.4 million to $34.0 million. The company’s detailed reconciliation put the adjusted EBITDA margin at 30.6%, which Yext rounded to 31% in its headline results.

That performance also marked a step up from the first quarter of fiscal 2027, when Yext generated $26.9 million of adjusted EBITDA on $107.9 million of revenue for a 25% margin. In June, management said it expected quarterly adjusted EBITDA margins to build toward 30% as the fiscal year progressed. The second-quarter result exceeded that 30% level.

Gross profitability was steadier. GAAP gross profit was $83.8 million, down 1% from a year earlier, while gross margin edged up to 75.5% from 75.2%. Non-GAAP gross margin was 78.0%, essentially unchanged from 78.1% in the comparable quarter.

The adjusted measure should be read alongside Yext’s GAAP results. Adjusted EBITDA excludes items including stock-based compensation, amortization, acquisition-related costs and certain other charges. Yext recorded $13.1 million of GAAP net income in the quarter, down from $26.8 million a year earlier, while its GAAP net income margin was 11.8%. Stock-based compensation alone was about $10.0 million, down 23% from the prior-year quarter.

The share count also changed materially after Yext’s tender offer earlier this year. Weighted-average basic shares fell 19% year over year to 100.1 million, and the company ended July with 99.3 million shares outstanding. A smaller share base can support per-share results even when revenue is not growing, making the capital-allocation program an important part of the earnings picture.

Enterprise ARR improved as smaller-customer churn continued

Management has been deliberately concentrating resources on larger enterprise customers, and the quarter showed both sides of that choice. ARR from customers with at least $50,000 of annual recurring revenue rose to $405.9 million from $399.3 million a year earlier. The same group represented 92% of Yext’s total ARR at July 31, up from 90% a year ago.

Retention improved within that larger-customer base. Gross retention reached 90%, compared with 89% in the year-ago period, while net retention rose to 98% from 96%. Yext said the improvement reflected both better retention and expansion within existing enterprise accounts. Over the previous 12 months, the cohort added a net $6.6 million of ARR.

Smaller customers moved in the opposite direction. Sub-$50,000 ARR fell to $34.9 million from $45.0 million, and net retention for that group was 79%. Yext said it is not committing material resources to offset churn among existing small-business customers that are a poor fit for its enterprise-oriented product. Total company net retention was 96%.

This divergence helps explain why overall ARR was nearly flat despite better performance among larger accounts. It also means the pace of enterprise growth will matter more as the smaller cohort becomes a reduced share of the business. Chairman and CEO Michael Walrath said Yext expects the positive momentum in the larger-customer group to continue into the third quarter, but the company did not issue a new numerical quarterly revenue or earnings forecast.

Yext’s lack of new numerical guidance is consistent with the reporting approach management set out in June. The company said then that it was suspending forward guidance and quarterly earnings calls in favor of longer-horizon shareholder communications. It did, however, give operating markers for the year, including adjusted EBITDA margins building toward 30% and GAAP net income margins of 10% to 15% in the remaining quarters. The second-quarter GAAP margin of 11.8% landed within that range.

Buybacks and AI products shape the next phase

Yext continued buying back stock during the quarter, repurchasing 1.8 million shares at an average price of $4.78 for $8.7 million, excluding fees. About $106.2 million remained available under the existing repurchase authorization at July 31. Since the beginning of fiscal 2023, the company said it has repurchased 55.1 million shares and reduced shares outstanding by roughly 24%.

Cash generation was weaker sequentially, but Yext attributed that pattern to seasonality. Free cash flow was $7.7 million in the second quarter, compared with $37.0 million in the first quarter, while trailing-12-month free cash flow was $53.0 million. Yext ended July with $86.8 million of cash and cash equivalents, $13.5 million of restricted cash and $147.7 million of debt tied to its credit facility. Management calculated net debt at $60.9 million, or about 0.5 times trailing-12-month adjusted EBITDA.

Product investment is running alongside the efficiency push. Yext completed its acquisition of GoShine in June and is integrating the technology as Brand Scout, adding brand-level visibility analysis to a platform that had focused heavily on local search visibility. The company said it plans to pilot the capability with a small group of enterprise customers before broader availability and does not expect GoShine’s acquired revenue to make a material contribution to consolidated results this fiscal year.

Action Center, a tool for managing automated marketing actions across Yext’s platform, became generally available on August 5. On September 1, alongside the earnings release, the company announced an early version of Corvo AI for small-business owners. The product uses a mobile-first conversational interface and is intended to give Yext a different route into the smaller-business market rather than simply applying its enterprise interface to that customer group.

September 30 is the next scheduled product milestone, when Yext will hold its Envision customer conference. The company said the expanded Scout capabilities will be featured there, with broader availability also planned for that date.