Yext reported solid quarterly revenue in Q2 FY2025 of $97.9 million, down 4.6% year over year and up 2.0% quarter over quarter, with a gross margin of 77.2%. The quarter reflects the company’s transition following the August 1, 2024 close of the Hearsay Systems acquisition. Management framed the results within a broader growth narrative anchored in platform consolidation, data integrity, and AI-enabled workflows. While profitability remains negative on a GAAP basis (operating loss of $7.6 million and net loss of $4.06 million), the company highlighted the strategic importance of the Hearsay integration and the potential for long-term margin expansion as cost synergies and cross-sell opportunities accrue.
Key takeaways from the earnings call include the expectation that Q3 and full-year FY2025 guidance incorporate two full quarters of Hearsay revenue, with Hearsay ARR previously guided near $60 million. Management stressed that the consolidation thesis — reducing software sprawl, unifying data, and enabling better analytics — remains central to the company’s growth trajectory, particularly in a cautious macro environment. The company also signaled a cautious but constructive outlook for ARR growth in the near term and emphasized the role of AI-enabled capabilities (listing optimization, review automation, and data-driven workflows) as a foundational driver of future adoption.
Financial position remains robust on a liquidity basis, with cash and cash equivalents of $234.8 million and a net cash position (net debt) of about $-134.0 million. However, operating cash flow was negative in the quarter ($-10.65 million), and free cash flow was negative at about $-11.19 million, reflecting ongoing investment and the initial integration costs from the Hearsay acquisition. Investors should monitor the pace of margin improvement, the pace of revenue synergies from Hearsay, and the trajectory of ARR growth as core and acquired assets scale together.