Yext, Inc.

Good afternoon and welcome to the Yext, Inc. First Quarter Fiscal 2025 Financial Results Conference Call. All participants will be in 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 your telephone keypad. 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 of Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to YAC's first quarter fiscal 2025 earnings conference call. With me today are CEO and Chair of the Board, Mike Walrath, and CFO, Daryl Bond. During this call, we will make forward-looking statements, including statements related to our future financial performance, statements regarding the timing and expected effects of our pending acquisition of hearsay systems, expectations regarding the growth of our business, our outlook for the second quarter and full year fiscal 2025, our strategy, and estimates of financial and operating metrics, capital expenditures, and other indications of future opportunities, as further described in our first quarter shareholder letter. 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 ability to compete, our acquisition of hearsay systems and integrate its business with ours, our management performance, and general economic and business conditions. These forward-looking statements represent our beliefs and assumptions only as of the date made, and we undertake no obligation to revise or update any statements to reflect changes that occur after this call. Further information on factors and other risks that could cause actual results to materially differ from these forward-looking statements is included in our reports filed with the SEC, including in the sections titled Special Note Regarding Forward-Looking Statements and Risk Factors in our most recent quarterly report on Form 10-Q for the three months ended April 30, 2024, and our shareholder letter that was issued this afternoon. During the call, we also refer to certain metrics, including non-GAAP financial measures. Reconciliations with the most comparable historical gap measures are available in the shareholder letter, which is available at investors.yext.com. We also provide definitions of these metrics in the shareholder letter. I will now turn the call over to Mike. Thanks, Nils.

Good afternoon, and thank you for joining us today. Hopefully by now you've read both the press release announcing our definitive agreement to acquire Hearsay Systems, as well as our first quarter letter to shareholders, which was posted to our website after the close of market. I'm very excited to discuss the news with you today, and our first quarter earnings call is the perfect forum to discuss recent events. I hope it was clear from reading our shareholder letter that we feel the opportunity to combine Hearsay's client engagement solutions with Yext's industry-leading digital presence platform is a game changer. As a trusted global leader in digital client engagement for financial services, Hearsay Systems empowers over 260,000 advisors and agents to proactively guide and capture the last mile of digital communication in a compliant manner. The world's leading financial firms rely on Hearsay's compliance-driven platform to scale their reach, optimize sales engagements, grow their business, and deliver exceptional client service. Yext and Hearsay are both trusted by leading financial firms and insurance providers who rely on our platforms to manage their digital presence and compliant customer engagement. Combined, we helped empower over 3,000 global brands. Yext is proud to work with nine of the ten largest U.S. banks and the four major wire houses. Hearsay's customer base includes the top five U.S. life insurance firms and four of the top five global wealth management firms. our joint customers will benefit from seamless access to new tools and capabilities to strengthen their management of the complete customer journey. A few important points regarding the financial terms of the deal. First, the purchase price is for $125 million. Subject to customary adjustments as set forth in the merger agreement, Yext may be required to pay additional contingent consideration of up to $95 million in cash or Yext common stock based on the achievement of certain milestones over a two-year period. Second, while the final audit of Hearsay's financial statements is still pending, we believe Hearsay generated approximately $60 million in revenue during its prior fiscal year ended December 31, 2023. Third, we believe Hearsay's operations are highly compatible with Yext, and though unaudited, they currently operate around free cash flow breakeven. Fourth, and finally, we estimate Hearsay's business is growing on the basis of ARR. Hearsay has approximately 300 employees globally, and we will be working in the coming months to finalize the plan for the integration of the two companies. Execution of the integration plan will begin after the transaction closes. We are not in a position to comment further on integration plans at this time, except to say that with Hearsay Systems, we believe Yext will be able to provide even more ways for brands to connect with their customers one-to-one. This acquisition will advance our efforts to deliver the products and solutions our customers value most. We look forward to welcoming the hearsay TMDX once the transaction closes. And with that, we'd like to open it up for questions.