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Yext: Still Not Giving Up

Mar. 09, 2018 8:02 AM ETYext, Inc. (YEXT)6 Comments
Gary Alexander profile picture
Gary Alexander


  • Yext reported an in-line fourth quarter, causing the stock to take a minor tumble.
  • The stock has failed to hold a sustained rally since going public amid other recent IPOs that have seen their stocks fly.
  • Yext is still pursuing a largely greenfield market in location data.
  • The company's shares are extremely appealing at 5x revenues, despite the less-than-stellar results this quarter.
  • Amid a market where most high-growth companies trade at extremely expensive multiples, Yext presents a solid value/growth play.

In the market for high-growth software companies, an in-line quarter is essentially a miss. When you have companies like SailPoint (SAIL) and Twilio (TWLO) beating revenue estimates this quarter by huge margins of 8%, 10%, or more, investors are pretty much conditioned to see large top-line numbers that completely smash Wall Street's estimates.

Leading up to earnings, this is essentially how investors had positioned Yext (Yext), the small/mid-cap software company that specializes in helping businesses manage their location data and geographic footprint across the web. Expecting a beat to this quarter, investors bid up shares of Yext from the low $12s to the mid $13s over the past week, but were horribly surprised when Yext managed to eke out just an in-line quarter on the top line (EPS exceeded expectations by a small margin). As a result, Yext's shares have continued their usual pattern since IPO - up some, down some more.

ChartYEXT data by YCharts

Yext is rare among software IPOs that went public last year in that its stock has failed to see any significant traction since going public. If you look at other companies that went public in the spring last year - Okta (OKTA), Alteryx (AYX), and Appian (APPN) being just a few examples - nearly all of them trade at around 2x their IPO price (or more, in Alteryx's case). Yext has barely moved beyond its $11 launch price.

And while it's true that Yext's IPO comps have had much more success in smashing quarterly earnings targets, I'd prefer to view Yext as a story that's still waiting to be discovered than as a bona fide laggard. After all, the space that it plays in, location data, is virtually untouched by the major software giants, and as data becomes a bigger and bigger agenda item on corporate strategy checklists, niche data players

ChartYEXT EV to Revenues (Forward) data by YCharts

This article was written by

Gary Alexander profile picture
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure: I am/we are long YEXT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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