Shares of Yext Inc. (NYSE:YEXT) plunged on Friday after the online brand management company reported a second-quarter loss that was slightly smaller than expected. The company, now in its 13th year, is not expected to become profitable anytime soon, according to its full-year guidance.
Q2 Earnings Summary
- Earnings: -$0.11 per share
- Revenue: $72.37 million
Yext reported a net loss of $0.11 per share for the quarter ended July 2019, slightly better than the $0.12 loss expected. Quarterly revenue was $72.37 million, slightly higher than expected and well above year-ago levels of $55.1 million.
The company’s full-year guidance is in line with the consensus forecast. Revenues are expected to range from $299 million to $301 million. Loss per share is expected to be anywhere between $0.41 and $0.43, the company said.
Yext is experiencing tremendous growth as far as revenues are concerned, but losses have mounted equally as fast. Since 2016, annual revenues and net losses have nearly doubled, according to Morningstar data.
Despite reporting mixed results, Yext has managed to land some of the world’s biggest companies. It also integrates with hundreds of major brands ranging from Apple to Instagram and up to Uber. Full integration across leading platforms allows businesses to manage their information and reputation seamlessly using the company’s knowledge graph.
YEXT Stock Plunges
The value of YEXT plunged following the earnings report and is now testing seven-month lows. The stock bottomed at $15.60 on Friday, the lowest since Jan. 31. Trade volumes were about 50% higher than normal, according to Yahoo Finance.
All said, YEXT closed down 14% to $15.77 on Friday. At current values, the company has a total market capitalization of $1.7 billion.
Since going public in 2017, Yext’s stock price has been highly volatile. YEXT peaked near $27.00 in September 2018 just before the massive correction swept Wall Street. The stock is down 37% over the past 12 months and has recovered only 7% so far this year.
By comparison, the S&P 500 Index has a one-year return of 3% and a 2019 tally of 17%. The S&P 500’s information technology index is up nearly 6% over the past year and 28% in 2019.
Yext has clearly underperformed the market since going public more than two years ago. With no signs of profitability, the company’s share price has room for further downside in the near term. The one silver lining is the company’s growing portfolio of high-profile customers. If the top line keeps growing, YEXT may be a better investment option in the future.
Disclaimer: Author holds no investment position in Yext at the time of writing.
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