Yext, Inc. (NYSE:YEXT) Q3 2020 Earnings Conference Call - Final Transcript

Dec 05, 2019 • 05:00 pm ET

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Yext, Inc. (NYSE:YEXT) Q3 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
James Steele

and mid-market. We now have the comprehensive solutions. We have the marketing, the sales enablement, the go-to market team and the opportunity, all aligned to realize their full potential.

So now, I'll turn the call over to Steve to walk you through the quarter in more detail. Steve?

Executive
Steven Cakebread

Jim, thank you. While the launch of Answers and the momentum generated at ONWARD19 are not reflected in our current financials. They do position us nicely for a long-term sustainable growth from our expanded market opportunity.

Our third quarter revenue grew 30% to $76.4 million. Revenue excluding small business customers grew 34%, highlighting the increasing role of our enterprise and mid-market investments. In addition, international revenue grew 67% year-over-year to $13.6 million. Unearned revenue increased 32% from the year ago period to $107.5 million. And as of October 31, we had $252 million in remaining performance obligation or RPO. And our backlog includes another $32 million in revenue, that's under contract but subject to accounting exclusions. On that basis, we have $284 million in estimated future revenue under contract.

Net retention was 107% for the overall Company, and comparable with Q3 last year. And our enterprise and mid-market net retention was 110%, again consistent with Q3 last year as well.

Gross margins were 73.3% this quarter compared to 74.6% last year. That's driven in part by hiring in our services organization, and additional lease expenses. Keep in mind, year-to-date gross margins are still 74.2% and we feel comfortable that over time our gross margins will continue to be in the range of 73% to 77%.

Total OpEx increased from $66.7 million last year to $98.8 million this quarter. Primary drivers of this increase was overall growth in headcount, including the increase in our quota carrying sales reps, along with the new leases in New York, District of Columbia and London. It will be incurring double lease expense in New York until our One Madison Avenue lease expires in December of 2020. Specifically, the annual run rate for our lease at One Madison Avenue is $4.8 million per year, while the annual run rate at 61 Ninth Avenue is $10.3 million a year. Once our lease at One Madison expires at the end of December 2020, our run rate for our lease expense in New York will be approximately $10.3 million annually. Keeping in mind, in Q4 of this year, our lease expense at One Madison will be $1.2 million and $2.6 million at 61 Ninth.

Third quarter net loss increased from $22.9 million a year ago to $42.7 million this quarter. On the basis of our 113.5 million weighted average basic shares outstanding net loss per share of $0.38 this quarter compares to $0.23 loss a year ago on the basis of 99.6 million weighted average basic shares outstanding.

Non-GAAP net loss, excluding stock-based compensation increased from $10 million a year ago to $21.6 million this quarter. And our non-GAAP net loss of $0.19 per share this quarter compares to $0.10 in