Yext Q2 Fiscal 2027 Earnings: Adjusted EBITDA Margin Expands Despite Lower Revenue

Yext (NYSE: YEXT) reported fiscal Q2 2027 revenue of $111.1 million, down about 1.8% from $113.1 million a year earlier, while GAAP basic EPS fell to $0.13 from $0.22. Adjusted EBITDA increased to $34.0 million and its margin reached 30.6%, but GAAP net income declined because the prior-year comparison included a sizable acquisition-related benefit.

Key Financial Results

Revenue contracted modestly in the three months ended July 31, 2026, while gross margin remained broadly stable. The more significant development was the divergence between GAAP results and adjusted profitability: operating income and net income declined, but adjusted EBITDA rose by approximately 29%.

Cost Reductions Lifted Adjusted EBITDA While a Prior-Year Benefit Distorted GAAP Comparisons

Yext reduced sales and marketing expense to $26.3 million from $32.1 million and research and development expense to $19.4 million from $23.4 million. Together, those two expense categories declined by approximately $9.7 million, supporting the expansion in adjusted EBITDA margin despite lower revenue.

The GAAP comparison moved in the opposite direction because general and administrative expense increased to $20.6 million from negative $0.1 million. Yext’s reconciliation shows that the prior-year quarter included a negative $23.1 million acquisition-related cost adjustment, which benefited the earlier GAAP result and was removed when calculating adjusted EBITDA. The comparable adjustment was a positive $0.3 million in the current quarter.

Current adjusted EBITDA also excludes $10.0 million of stock-based compensation and $6.2 million of depreciation and amortization, among other items. Investors therefore need to distinguish the improvement in underlying adjusted expenses from the decline in reported GAAP profitability.

ARR and Platform Developments

ARR ended the quarter at $440.8 million. Management said growth in the enterprise ARR customer cohort accelerated again, supported by better retention and expansion, and indicated that it was seeing signs of that momentum continuing into the third quarter. However, the supplied results did not disclose comparable ARR or numerical retention rates, limiting the ability to measure the magnitude of the improvement.

Yext also completed its acquisition of GoShine, extending its platform into brand-level visibility optimization for AI search. In August, after the quarter ended, the company released a working prototype of Corvo AI, a conversational platform intended to bring Yext’s marketing agents to small-business owners. The release did not quantify the acquisition’s contribution to current revenue or provide financial targets for either initiative.

Cash Flow, Balance Sheet, and Capital Allocation

The release provided cash-flow information only for the first six months of fiscal 2027, not for the second quarter alone. Six-month operating cash flow was $45.4 million, compared with $46.1 million a year earlier. After $0.7 million of capital expenditures, operating cash flow less capital expenditures was approximately $44.7 million.

Working-capital movements were important to cash generation. A $50.2 million reduction in accounts receivable contributed cash, while decreases in unearned revenue and accounts payable, accrued expenses and other current liabilities used $37.3 million and $17.7 million, respectively.

Yext spent $150.9 million on share repurchases during the six-month period, up from $45.4 million a year earlier, and received $49.5 million from debt issuance. Cash and cash equivalents fell to $86.8 million from $154.1 million at January 31, while long-term debt rose to $147.7 million from $98.0 million. Quarterly interest expense consequently increased to $3.6 million from $2.3 million. Shares outstanding declined to 99.3 million from 122.9 million at the end of January.

Recent Insider Transactions

The supplied six-month insider data showed 1.7 million shares purchased across 17 transactions and 5.0 million shares sold across two transactions, resulting in net sales of approximately 3.2 million shares. The following table lists the latest disclosed transactions with specific actions and reported values; these transactions do not by themselves establish insiders’ views about Yext’s prospects.

Risks Investors Should Watch

• Revenue has not returned to growth. Revenue declined about 1.8%, so the qualitative improvement in enterprise retention and expansion still needs to translate into higher reported revenue.
• GAAP and adjusted profitability remain materially different. Adjusted EBITDA excludes significant stock-based compensation and other costs, while an acquisition-related benefit distorted the prior-year GAAP comparison.
• Repurchases have reduced liquidity and increased leverage. Cash declined while debt and quarterly interest expense increased, making future cash generation and capital-allocation decisions more important.
• Financial returns from newer AI initiatives remain unquantified. Yext disclosed the GoShine acquisition and Corvo AI prototype but did not provide revenue contributions, adoption metrics or financial targets for these initiatives.

Summary

Yext’s fiscal Q2 2027 results showed modest revenue contraction alongside meaningful adjusted expense discipline, producing a higher adjusted EBITDA margin. GAAP profit declined largely because the prior-year period benefited from an unusual acquisition-related adjustment. The next points to monitor are whether improved enterprise retention and expansion restore revenue growth, how quickly newer AI products contribute, and whether cash generation can support the company’s more leveraged balance sheet and capital-return program.