YEXT

Yext's FY2026 is a genuine inflection: after four straight years of losses (–$93M in FY2022 down to –$2.6M in FY2024, then a –$27.9M relapse in FY2025), it swung to $37.9M net income on $447M revenue, with operating income of $44.5M (10.0% operating margin) and $55.8M of operating cash flow against just $2.56M of capex. The subscription model throws off cash, gross margin is a healthy 74.5%, and the balance sheet is serviceable — $154M cash (up 25%) against only $98M long-term debt and $159M equity. ROE screens at 23.8%. So the market is paying a rich-looking 70.9x trailing EPS and 1.4x sales for a business that has finally proven it can convert its high-margin recurring revenue into profit.

The catch is that the growth underneath is thin. Revenue rose only 6.1% and most of that is inorganic — the August 2024 Hearsay acquisition. Gross profit grew just 2.4% (well below the 6.1% revenue line, so unit economics are compressing), and total ARR was essentially flat at $444.3M vs $442.7M (+0.4%). The composition is worrying: the long tail of customers under $50K of ARR shrank 14% ($47.4M→$40.6M) and Direct-customer ARR actually declined slightly; only the $50K+ cohort and third-party resellers grew. Management flags macro pressure — customers renegotiating, shortening or not renewing contracts — and the accumulated deficit is still –$669M. This is a mature, low-growth, newly-profitable software company, not a compounder.