Yext, Inc.

Good day and welcome to the Yext Third Quarter Fiscal 2023 Financial Results Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Nils Erdmann, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to the next fiscal third quarter 2023 conference call. With me today are CEO and Chair of the Board, Mike Walrath, COO and President, Mark Farentino, and CFO, Daryl Bond. During this call, we will make forward-looking statements, including statements related to our future financial performance, expectations regarding the growth of our business, our outlook for the fourth quarter and fiscal year 2023, our strategy and estimates of financial and operating metrics, capital expenditures, and other indications of future opportunities, as further described in our third quarter earnings press release. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to Yext's growth, the evolution of our industry, our product development and success, our management performance, and general economic and business conditions. such as the impact of the COVID-19 pandemic. We undertake no obligation to revise any statements to reflect changes that occur after this call. Descriptions of these and other risks that could cause actual results to differ materially from these forward-looking statements are discussed in our reports filed with the SEC, including our most recent Form 10-Q for the quarter ended July 31, 2022, our annual report on Form 10-K for the fiscal year ended January 31, 2022, and our press release that was issued this afternoon. During the call, we also referred to non-GAAP financial measures. Reconciliations with the most comparable GAAP measures are available in the earnings press release, which is available at investors.yext.com. I will now turn the call over to Mike.

Thanks, Nils, and thanks, everyone, for joining us today. We are pleased to report Q3 results that demonstrate the continued execution of our strategy to drive efficient and profitable growth by delivering best-in-class products and services that create tremendous value for our customers. I'll start with a brief rundown of our financial performance. In Q3, our revenue was $99.3 million. On a constant currency basis, Our quarterly revenue increased roughly 4% over the prior year period, primarily driven by new customers and upsells. Our non-GAAP net income per share was $0.02, compared to a non-GAAP net loss per share of $0.04 in the same period last year. This improvement was largely driven by our success in streamlining our business and improving our operating efficiencies. What this illustrates is that the groundwork we laid in the first half of this year is paying off. and we're delivering on the financial commitments we made while continuing to find ways to improve our margins and successfully manage costs to increase our profitability. This quarter, we were able to further reduce our non-GAAP operating expenses as percentage of revenue to 73%, down from 81% in the same period a year ago. In addition, sales and marketing as a percentage of revenue was 44%, down from 52% in the year-ago period, while our direct ARR growth was up 3% year over year, or 6% on a constant currency basis. In other words, we generated ARR growth with a significantly reduced sales and marketing budget. Our sales team has grown increasingly productive as we align around our highest priorities, customer satisfaction, operational efficiency, and product innovation. To achieve these results, particularly in the face of a challenging macroeconomic environment, is a testament to our team's strength and commitment. The macroeconomic headwinds have placed increased scrutiny on budgets and elongated sales cycles, and this is likely to continue to impact our business in the near term. But our value proposition resonates strongly with our customers. As we continue to do more with less, we are helping our customers to do the same. It is important to underscore that we are a net saver of cost for our customers. Our customers are the best source of real-time feedback, both direct and indirect. and gathering that information is our first responsibility. Acting on it by developing product features and enhancements is one of the best means of showing them that we're listening and we're committed to making product decisions that will drive greater value. While we remain focused on operating efficiency, we are committed to developing new and transformative technology to enhance our platform. Our continued investment in technology innovation helps strengthen our relationships with our customers and leads to greater adoption of our Answers platform. This is reflected in our strength in bookings this quarter, both in terms of the breadth and the size of deals we closed. As I mentioned earlier, we're seeing direct ARR growth from new customers and upsells, and just as importantly, our Q3 gross retention rate was the highest it has been this year. We calculate gross retention by comparing the total dollar value of contracts up for renewal in a given quarter against what was renewed, excluding upsells, and in Q3, this percentage moved up into the mid-80s. This is very encouraging, particularly when taking into account that a handful of sizable renewals closed in the early days of Q4. Had these closed in Q3, our gross retention would have been several points higher. Even without these deals, we demonstrated sequential improvement in gross retention this quarter. Our focus in this area is having a positive impact. To build on this momentum, last month we welcomed Tom Nielsen to Yext as our Chief Revenue Officer to lead the execution of our sales and customer success strategies. Tom was most recently EVP and head of worldwide sales at New Relic, and his expertise in building and managing scalable, dynamic go-to-market engines is what makes him the ideal leader to drive improved sales execution and accelerate our global revenue growth. His oversight of our overall revenue strategy will drive better integration across our direct and partner businesses and alignment across our sales and customer service organizations. While Tom's focus will be on our revenue engine, we will continue to look for ways to drive efficiency of our business and enhance our profitability, which is critical to our success. As our Q3 results indicate and our Q4 and full-year guidance suggest, we continue to operate with an unwavering focus on long-term, sustainable growth through an efficient operating model. I'd like to take a moment and thank our entire global team for their hard work and commitment to Yext and to getting the right answers for our customers. And with that, I'd now like to turn the call over to Mark.