10-Q 1 yext-20220430.htm 10-Q yext-20220430
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
                 For the transition period from                  to                 
Commission File Number: 001-38056
YEXT, INC.
(Exact name of registrant as specified in its charter)
yext-20220430_g1.jpg
Delaware
20-8059722
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
61 Ninth Avenue
New York, NY 10011
(Address of principal executive offices, including zip code)
(212) 994-3900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
YEXT
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller



reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
 ☐
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).    Yes    No  
As of May 25, 2022, the registrant had 123,588,182 shares of common stock, $0.001 par value per share outstanding.



TABLE OF CONTENTS
PAGE




SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains, and our officers and representatives may from time to time make, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “plan,” “intend,” “could,” “would,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:
our future revenue, cost of revenue, operating expenses and cash flows;
anticipated trends, growth rates and challenges in our business and in the markets in which we operate;
the effect of the coronavirus (“COVID-19”) pandemic and its variants, including the effect of governmental restrictions and regulations as well as precautionary measures undertaken by businesses, on our business, operations, and financial results and the business and operations of our customers and potential customers;
our beliefs, objectives and strategies for future operations, including plans to invest in international expansion, research and development, and our sales and marketing teams, and the impact of such investments on our operations;
changes in management and anticipated effects thereof;
our ability to increase sales of our products;
maintaining and expanding our end-customer base and our relationships with our Knowledge Network; and
sufficiency of cash to meet cash needs for at least the next 12 months.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A. “Risk Factors” in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, whether written or oral, except as required by law.
In this Quarterly Report on Form 10-Q, the words “we,” “us,” “our” and “Yext” refer to Yext, Inc. and its wholly owned subsidiaries, unless the context requires otherwise.

4


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
YEXT, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
April 30, 2022January 31, 2022
Assets
Current assets:
Cash and cash equivalents
$247,769 $261,210 
Accounts receivable, net of allowances of $1,187 and $2,042, respectively
58,012 101,607 
Prepaid expenses and other current assets
19,035 13,538 
Costs to obtain revenue contracts, current
32,015 33,998 
Total current assets
356,831 410,353 
Property and equipment, net
71,555 74,604 
Operating lease right-of-use assets
93,554 97,124 
Costs to obtain revenue contracts, non-current
23,852 27,286 
Goodwill
4,401 4,572 
Intangible assets, net
211 217 
Other long term assets
5,030 6,179 
Total assets
$555,434 $620,335 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities
$54,449 $48,432 
Unearned revenue, current
196,379 223,427 
Operating lease liabilities, current
18,236 18,845 
Total current liabilities
269,064 290,704 
Operating lease liabilities, non-current
109,959 113,776 
Other long term liabilities
3,491 3,985 
Total liabilities
382,514 408,465 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 50,000,000 shares authorized at April 30, 2022 and January 31, 2022; zero shares issued and outstanding at April 30, 2022 and January 31, 2022
  
Common stock, $0.001 par value per share; 500,000,000 shares authorized at April 30, 2022 and January 31, 2022; 139,407,429 and 137,662,320 shares issued at April 30, 2022 and January 31, 2022, respectively; 128,063,911 and 131,156,986 shares outstanding at April 30, 2022 and January 31, 2022, respectively
139 137 
Additional paid-in capital
855,284 834,429 
Accumulated other comprehensive loss
(3,601)(187)
Accumulated deficit
(636,443)(610,604)
Treasury stock, at cost
(42,459)(11,905)
Total stockholders’ equity
172,920 211,870 
Total liabilities and stockholders’ equity
$555,434 $620,335 
See the accompanying notes to the condensed consolidated financial statements.
5


YEXT, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
(Unaudited)

Three months ended April 30,
20222021
Revenue
$98,802 $91,992 
Cost of revenue
24,728 21,854 
Gross profit
74,074 70,138 
Operating expenses:
Sales and marketing
60,779 55,166 
Research and development
17,302 13,857 
General and administrative
21,495 18,347 
Total operating expenses
99,576 87,370 
Loss from operations
(25,502)(17,232)
Interest income
25 6 
Interest expense
(143)(132)
Other expense, net
129 (86)
Loss from operations before income taxes
(25,491)(17,444)
(Provision for) benefit from income taxes
(348)(187)
Net loss
$(25,839)$(17,631)
Net loss per share attributable to common stockholders, basic and diluted
$(0.20)$(0.14)
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted
131,144,055 125,372,839 
Other comprehensive (loss) income:
Foreign currency translation adjustment
$(3,414)$355 
Total comprehensive loss
$(29,253)$(17,276)
See the accompanying notes to the condensed consolidated financial statements.



6


YEXT, INC.
Condensed Consolidated Statements of Stockholders' Equity
(In thousands)
(Unaudited)
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
SharesAmountCapital(Loss) IncomeDeficitStockEquity
Balance, January 31, 2021
123,989 $130 $733,933 $2,422 $(517,345)$(11,905)$207,235 
Exercise of stock options2,220 2 19,195 — — — 19,197 
Vested restricted stock units converted to common shares4,402 4 (4)— — —  
Issuance of restricted stock15 — — — — —  
Issuance of common stock under employee stock purchase plan531 1 6,484 — — — 6,485 
Stock-based compensation— — 74,821 — — — 74,821 
Other comprehensive loss— — — (2,609)— — (2,609)
Net loss— — — — (93,259)— (93,259)
Balance, January 31, 2022
131,157 137 834,429 (187)(610,604)(11,905)211,870 
Exercise of stock options123  302 — — — 302 
Vested restricted stock units converted to common shares1,165 1 (1)— — —  
Issuance of common stock under employee stock purchase plan457 1 2,353 — — — 2,354 
Stock-based compensation— — 18,201 — — — 18,201 
Repurchase of common stock(4,838)— — — — (30,554)(30,554)
Other comprehensive loss— — — (3,414)— — (3,414)
Net loss— — — — (25,839)— (25,839)
Balance, April 30, 2022
128,064 $139 $855,284 $(3,601)$(636,443)$(42,459)$172,920 
See the accompanying notes to the condensed consolidated financial statements.

7


YEXT, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended April 30,
20222021
Operating activities:
Net loss
$(25,839)$(17,631)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense
4,387 3,717 
Bad debt expense
(650)181 
Stock-based compensation expense
18,086 14,598 
Amortization of operating lease right-of-use assets
2,370 2,278 
Other, net302 161 
Changes in operating assets and liabilities:
Accounts receivable
42,680 41,914 
Prepaid expenses and other current assets
(5,685)1,221 
Costs to obtain revenue contracts
4,383 (5,534)
Other long term assets
678 (156)
Accounts payable, accrued expenses and other current liabilities
4,987 1,945 
Unearned revenue
(24,519)(5,186)
Operating lease liabilities
(3,151)(2,786)
Other long term liabilities
(168)341 
Net cash provided by operating activities
17,861 35,063 
Investing activities:
Capital expenditures
(1,644)(7,457)
Net cash used in investing activities
(1,644)(7,457)
Financing activities:
Proceeds from exercise of stock options
311 12,168 
Repurchase of common stock(27,142) 
Payments of deferred financing costs
(68)(44)
Proceeds, net from employee stock purchase plan withholdings
606 1,483 
Net cash (used in) provided by financing activities
(26,293)13,607 
Effect of exchange rate changes on cash and cash equivalents
(3,365)475 
Net (decrease) increase in cash and cash equivalents
(13,441)41,688 
Cash and cash equivalents at beginning of period
261,210 230,411 
Cash and cash equivalents at end of period
$247,769 $272,099 
See the accompanying notes to the condensed consolidated financial statements.
8


YEXT, INC.
Notes to Condensed Consolidated Financial Statements

1. Organization and Description of Business
Description of Business
Yext, Inc. ("Yext" or the "Company") organizes a business's facts so it can provide official answers to consumer questions starting with the business's own website and then extending across search engines and voice assistants. The Yext platform lets businesses structure the facts about their brands in a database called the Knowledge Graph. The platform is built to leverage the structured data stored in the Knowledge Graph to deliver a modern search experience on a business's or organization's own website, as well as across approximately 200 service and application providers, which the Company refers to as its Knowledge Network and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp. The Yext platform powers all of the Company's key features, including Listings, Pages, and Answers, along with its other features and capabilities.
Fiscal Year
The Company's fiscal year ends on January 31st. References to fiscal 2023, for example, are to the fiscal year ending January 31, 2023.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on March 18, 2022 (the "Form 10-K"). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated balance sheet as of January 31, 2022, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis.
In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three months ended April 30, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending January 31, 2023, or any other period.
There have been no material changes to the Company's significant accounting policies as described in the Form 10-K.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of those financial statements and the reported amounts of revenue and expense during the reporting period. These estimates include, but are not limited to, the standalone selling prices of performance obligations, the incremental borrowing rate associated with lease liabilities, the useful life of capitalized costs to obtain revenue contracts, income taxes, and the valuation and assumptions underlying stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations.
Segment Information
The Company is the provider of the Yext platform and operates as one operating segment. An operating segment is defined as a component of an enterprise for which separate financial information is evaluated regularly by the chief operating decision makers ("CODM"). The Company defines its CODM as its executive officers, and their role is to make decisions about allocating resources and assessing performance. The Company's business operates as one operating segment as all of the Company's offerings operate on the Yext platform and are deployed in an identical way, with its CODM evaluating the Company's financial information, resources and performance of these resources on a consolidated basis. Since the Company operates as one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.
9


Concentration of Credit Risk
Certain financial instruments that could be exposed to a concentration of credit risk include cash and cash equivalents and accounts receivable. The Company deposits its cash with financial institutions, and such deposits, at times, may exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents to date. Collateral is not required for accounts receivable. At April 30, 2022 and January 31, 2022, no single customer accounted for more than 10% of the Company's accounts receivable. No single customer accounted for more than 10% of the Company's revenue for the three months ended April 30, 2022 and 2021, respectively.
Recent Accounting Pronouncements
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The standard requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers, as if the acquirer had originated the contracts, provided such contracts had been appropriately accounted for under ASC 606 by the acquiree, rather than recognizing them at their estimated fair value on the acquisition date as required under the existing guidance. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022 on a prospective basis, with early adoption permitted. This standard is effective for the Company in fiscal year 2024. We do not expect the adoption of this standard to have a significant impact on its consolidated financial statements.
3. Revenue
Performance Obligations
The Company has identified that it has two distinct performance obligations: subscription and associated support to the Yext platform and professional services. The Company's revenue is predominantly related to its subscription and associated support to the Yext platform. Professional services revenue accounted for approximately 9% and 8% of the Company's total revenue for the three months ended April 30, 2022 and 2021, respectively.
Geographic Region
The Company disaggregates its revenue from contracts with customers by geographic region, as it believes this best depicts how the nature, amount, timing, and uncertainty of its revenues and cash flows are affected by economic factors. Revenue by geographic region is determined based on the region of the Company's contracting entity, which may be different than the region of its customers. The following table presents the Company's revenue by geographic region:
Three months ended April 30,
(in thousands)20222021
North America$78,709 $73,060 
International20,093 18,932 
Total revenue$98,802 $91,992 
North America revenue is attributable to the United States. International revenue is predominantly attributable to European countries, but also includes Japan.
The Company's revenue attributable to the United States represented 80% of total revenue, revenue attributable to England, which serves as the Company's main contracting entity for Europe, represented 18% of total revenue, and no other individual country represented more than 10% of total revenue for the three months ended April 30, 2022.
The Company's revenue attributable to the United States represented 79% of total revenue, revenue attributable to England, which serves as the Company's main contracting entity for Europe, represented 18% of total revenue, and no other individual country represented more than 10% of total revenue for the three months ended April 30, 2021.
Contract Liabilities
A contract liability is an obligation to transfer goods or services for which consideration has been received or is due to a customer. The Company's contract liabilities consist primarily of unearned revenue and, to a lesser extent, customer deposits.
As of April 30, 2022, unearned revenue, current was $196.4 million, while unearned revenue, non-current, which is included within other long term liabilities on the Company's condensed consolidated balance sheet, was $0.3 million. Revenue recognized of $86.2 million during the three months ended April 30, 2022 was included in unearned revenue at the beginning of the period.
Customer deposits represent payments received in advance in instances where a revenue contract is cancelable in nature, and therefore the Company does not have an unconditional obligation to transfer control to a customer. As of April 30, 2022 and January 31, 2022, customer deposits of $1.5 million and $0.2 million were included in accounts payable, accrued expenses and other current liabilities on the Company's condensed consolidated balance sheet, respectively.
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Remaining Performance Obligations
The transaction price allocated to remaining performance obligations represents amounts under non-cancelable contracts expected to be recognized as revenue in future periods, and may be influenced by several factors, including seasonality, the timing of renewals, and contract terms. As of April 30, 2022, the Company had $360.6 million of remaining performance obligations, of which $341.1 million is expected to be recognized as revenue over the next twenty-four months, with the remaining balance expected to be recognized thereafter. As of January 31, 2022, the Company had $404.9 million of remaining performance obligations.
4. Fair Value of Financial Instruments
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive (loss) income when they occur. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurement or assumptions that market participants would use in pricing the assets or liabilities, such as inherent risk, transfer restrictions, and credit risk.
The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 inputs are based on quoted prices in active markets for identical assets or liabilities. 
Level 2 inputs are based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. 
Level 3 inputs are based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities, and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability.
As of April 30, 2022 and January 31, 2022, the Company had money market funds included in cash and cash equivalents of $113.4 million and $138.5 million, respectively. These assets were valued using quoted market prices and were classified as Level 1 accordingly.
5. Goodwill
As of April 30, 2022 and January 31, 2022, the Company had goodwill of $4.4 million and $4.6 million, respectively. The changes to goodwill during these periods related to foreign currency.
Goodwill is not amortized but is subject to periodic testing for impairment at the reporting unit level, which is at or one level below the operating segment level. The Company operates as one operating segment, which represents its one reporting unit. The test for impairment is conducted annually each November 1st, or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
The Company determined that no events occurred or circumstances changed that would more likely than not reduce the fair value of the Company's reporting unit below its carrying amount during the three months ended April 30, 2022 and 2021. However, if certain events occur or circumstances change, it may be necessary to record impairment charges in the future.
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6. Property and Equipment, Net
Property and equipment are recorded at cost and depreciated or amortized on a straight-line basis over their estimated useful lives. Property and equipment, net consisted of the following:
(in thousands)April 30, 2022January 31, 2022
Computer software$19,885 $18,814 
Office equipment19,507 18,854 
Furniture and fixtures7,965 8,163 
Leasehold improvements 62,042 62,784 
Construction in progress1,569 936 
Software in progress706 1,342 
Total property and equipment, gross111,674 110,893 
Less: accumulated depreciation(40,119)(36,289)
Total property and equipment, net$71,555 $74,604 
The Company's property and equipment, net attributable to the United States was 90% as of both April 30, 2022 and January 31, 2022. No other individual country represented more than 10% of the total property and equipment, net as of those periods. Depreciation expense was $4.4 million and $3.6 million for the three months ended April 30, 2022 and 2021, respectively.
7. Accounts Payable, Accrued Expenses and Other Current Liabilities
        Accounts payable, accrued expenses and other current liabilities consisted of the following:
(in thousands)April 30, 2022January 31, 2022
Accounts payable$11,446 $9,218 
Accrued employee compensation16,593 17,589 
Accrued Knowledge Network application provider fees2,909 2,885 
Accrued professional services and associated costs2,341 2,663 
Accrued employee stock purchase plan withholdings liability650 2,397 
Other current liabilities20,510 13,680 
Total accounts payable, accrued expenses and other current liabilities$54,449 $48,432 
As of April 30, 2022 and January 31, 2022, capital expenditures of $1.1 million and $0.9 million were included in accounts payable, accrued expenses and other current liabilities, respectively.
8. Stock-Based Compensation
2008 Equity Incentive Plan
        The Company's 2008 Equity Incentive Plan (the "2008 Plan"), as amended on March 10, 2016, allowed for the issuance of up to 25,912,531 shares of common stock. Awards granted under the 2008 Plan may be incentive stock options ("ISOs"), nonqualified stock options ("NQSOs"), restricted stock and restricted stock units. The 2008 Plan is administered by the Company's Board of Directors, which determines the terms of the options granted, the exercise price, the number of shares subject to option and the option vesting period. No ISO or NQSO is exercisable after 10 years from the date of grant, and option awards will typically vest over a four-year period.
        The 2008 Plan was terminated in connection with the adoption of the Company's 2016 Equity Incentive Plan (the "2016 Plan") in December 2016, and since the 2008 Plan termination the Company has not granted and will not grant any additional awards under the 2008 Plan. However, the 2008 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.
2016 Equity Incentive Plan
        In December 2016, the Company's Board of Directors adopted, and its stockholders approved, the 2016 Plan. The number of shares reserved for issuance under the 2016 Plan will increase on the first day of each fiscal year during the term of the 2016 Plan by the lesser of: (i) 10,000,000 shares, (ii) 4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company's Board of Directors may determine. On February 1, 2022, the number of shares of common stock available for issuance under the 2016 Plan was automatically increased according to its terms by 5,246,279 shares. In addition, the shares reserved for issuance under the 2016 Plan also include shares returned to the 2008 Plan as the result of
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expiration or termination of options or other awards. As of April 30, 2022, the number of shares available for future award under the 2016 Plan is 6,334,782.
Stock Options
       The following table summarizes the activity related to the Company's stock options:
Outstanding Stock OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Life (in years)Aggregate Intrinsic Value
(in thousands)
Balance, January 31, 2022
6,620,701 $7.28 4.32$11,723 
Granted $ 
Exercised(122,519)$2.48 
Forfeited or canceled(935,500)$12.47 
Balance, April 30, 2022
5,562,682 $6.52 3.78$2,338 
Vested and expected to vest5,562,682 $6.52 3.78$2,338 
Exercisable at April 30, 2022
5,562,682 $6.52 3.78$2,338 
The aggregate intrinsic value of options vested and expected to vest and exercisable is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of April 30, 2022. The fair value of the common stock is the Company’s closing stock price as reported on the New York Stock Exchange.
The aggregate intrinsic value of exercised options was $0.5 million and $6.3 million for the three months ended April 30, 2022 and 2021, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date.
Restricted Stock and Restricted Stock Units
        The following table summarizes the activity related to the Company's restricted stock and restricted stock units:
OutstandingWeighted-Average Grant Date Fair Value
Balance as of January 31, 2022
10,184,214 $14.38 
Granted 2,943,582 $7.58 
Vested and converted to shares(1,174,990)$15.33 
Forfeited or canceled(1,670,799)$14.51 
Balance as of April 30, 2022
10,282,007 $11.94 
The estimated weighted-average grant date fair value of restricted stock and restricted stock units granted was $7.58 and $15.42 per share for the three months ended April 30, 2022 and 2021, respectively. The fair value of the common stock is the Company’s closing stock price as reported on the New York Stock Exchange.
Employee Stock Purchase Plan
In March 2017, the Company's Board of Directors adopted, and its stockholders approved, the 2017 Employee Stock Purchase Plan ("ESPP"), which became effective on the date it was adopted. The number of shares of the Company's common stock that will be available for sale to employees under the ESPP increases annually on the first day of each fiscal year in an amount equal to the lesser of: (i) 2,500,000 shares; (ii) 1% of the outstanding shares of the Company's common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the administrator may determine. On February 1, 2022, the number of shares of common stock available for issuance under the ESPP was automatically increased according to its terms by 1,311,569 shares. As of April 30, 2022, a total of 4,397,670 shares of the Company's common stock are available for sale to employees under the ESPP.
In connection with the offering period which ended on March 15, 2022, 457,595 shares of common stock were purchased under the ESPP at a purchase price of $5.14 per share for total proceeds of $2.4 million.
A new offering period began on March 15, 2022 and will end on September 15, 2022. As of April 30, 2022, 340,938 shares are estimated to be purchased at the end of the offering period and $0.7 million has been withheld on behalf of employees for these future purchases under the ESPP and is included in accounts payable, accrued expenses and other current liabilities.
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The Black-Scholes option pricing model assumptions estimated at the commencement of the new offering period and used to calculate the fair value of shares to be purchased during an ESPP offering period included expected lives of 0.5 years, expected volatility of 48.87% and 59.24%, and risk-free rates of 0.86% and 0.06%, for the three months ended April 30, 2022 and 2021, respectively.
The expected life assumptions were based on each offering period's respective purchase date. The Company estimated the expected volatility assumption based on the historical volatility of its stock price. The risk-free rate assumptions were based on the U.S. treasury yield curve in effect at commencement of the offering period. The dividend yield assumption was zero as the Company has not historically paid any dividends and does not expect to declare or pay any dividends in the foreseeable future.
During the three months ended April 30, 2022 and 2021, the Company recorded stock-based compensation expense associated with the ESPP of $0.4 million and $0.6 million, respectively. As of April 30, 2022, total unrecognized compensation cost related to ESPP was $0.4 million, net of estimated forfeitures, which will be amortized over a weighted-average remaining period of 0.38 years.
A new offering period commences on the first trading day on or after March 15th and September 15th each year, or on such other date as the administrator will determine, and will end on the first trading day, approximately six months later, on or after September 15th and March 15th, respectively. Participants may purchase the Company’s common stock through payroll deductions, up to a maximum of 15% of their eligible compensation. Unless changed by the administrator, the purchase price for each share of common stock purchased under the ESPP will be 85% of the lower of the fair market value per share on the first trading day of the applicable offering period or the fair market value per share on the last trading day of the applicable offering period.
Performance-based Restricted Stock Units
During the three months ended April 30, 2022, the Company made a grant to an executive in the form of 2,000,000 performance-based restricted stock units. This grant was outside of the Company’s 2016 Equity Incentive Plan. These performance-based restricted stock units are subject to the achievement of certain stock price targets. The Company uses a Monte Carlo simulation model to determine the fair value of this award and recognizes expense using the accelerated attribution method over the requisite service period.
Stock-Based Compensation Expense
        Stock-based compensation represents the cost related to stock-based awards granted in lieu of monetary payment. The Company measures stock-based compensation associated with stock-based awards issued to employees at the grant date, based on the estimated fair value of the award, and recognizes expense, net of estimated forfeitures, over the vesting period of the applicable award using the straight-line method.
The Company's stock-based compensation expense for the periods presented was as follows:
Three months ended April 30,
(in thousands)20222021
Cost of revenue$1,382 $1,445 
Sales and marketing6,376 5,501 
Research and development4,520 3,988 
General and administrative5,808 3,664 
Total stock-based compensation expense$18,086 $14,598 
During the three months ended April 30, 2022 and 2021, the Company capitalized $0.1 million and $0.7 million, respectively of stock-based compensation related to software development.

As of April 30, 2022, there was approximately $122.9 million of total unrecognized compensation cost related to unvested stock-based awards, which are expected to be recognized over an estimated remaining weighted-average vesting period of approximately 2.71 years.

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9. Equity
The following table summarizes the changes in stockholders' equity during the three months ended April 30, 2022:
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
(in thousands)SharesAmountCapital(Loss)DeficitStockEquity
Balance, January 31, 2022
131,157 $137 $834,429 $(187)$(610,604)$(11,905)$211,870 
Exercise of stock options123 — 302 — — — 302 
Vested restricted stock units converted to common shares1,165 1 (1)— — —  
Issuance of common stock under employee stock purchase plan457 1 2,353 — — — 2,354 
Stock-based compensation— — 18,201 — — — 18,201 
Repurchase of common stock(4,838)— — — — (30,554)(30,554)
Other comprehensive loss— — — (3,414)— — (3,414)
Net loss— — — — (25,839)— (25,839)
Balance, April 30, 2022
128,064 $139 $855,284 $(3,601)$(636,443)$(42,459)$172,920 
The following table summarizes the changes in stockholders' equity during the three months ended April 30, 2021:
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
(in thousands)SharesAmountCapitalIncomeDeficitStockEquity
Balance, January 31, 2021
123,989 $130 $733,933 $2,422 $(517,345)$(11,905)$207,235 
Exercise of stock options1,069 1 12,110 — — — 12,111 
Vested restricted stock units converted to common shares871 1 (1)— — —  
Issuance of restricted stock4 — — — — —  
Issuance of common stock under employee stock purchase plan282 — 3,817 — — — 3,817 
Stock-based compensation— — 15,288 — — — 15,288 
Other comprehensive income— — — 355 — — 355 
Net loss— — — — (17,631)— (17,631)
Balance, April 30, 2021
126,215 $132 $765,147 $2,777 $(534,976)$(11,905)$221,175 

Preferred Stock
Effective April 2017, the Company’s Board of Directors is authorized to issue up to 50,000,000 shares of preferred stock, $0.001 par value, in one or more series without stockholder approval. The Company's Board of Directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. The issuance of preferred stock could have the effect of restricting dividends on the Company’s common stock, diluting the voting power of its common stock, impairing the liquidation rights of its common stock, or delaying or preventing changes in control or management of the Company. As of April 30, 2022 and January 31, 2022, no shares of preferred stock were issued or outstanding.
Common Stock
        As of April 30, 2022 and January 31, 2022, the Company had authorized 500,000,000 shares of voting $0.001 par value common stock. Each holder of the Company's common stock is entitled to one vote for each share on all matters to be voted upon by the stockholders and there are no cumulative rights. Subject to any preferential rights of any outstanding preferred stock, holders of the Company's common stock are entitled to receive ratably the dividends, if any, as may be declared from time to time by the Company's Board of Directors out of legally available funds. If there is a liquidation, dissolution or winding up of the Company, holders of the Company's common stock would be entitled to share in the Company's assets remaining after the payment of liabilities and any preferential rights of any outstanding preferred stock.
        Holders of the Company's common stock have no preemptive or conversion rights or other subscription rights, and there are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of the Company's common stock will be fully paid and non-assessable. The rights, preferences and privileges of the holders of the Company's common stock are subject to,
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and may be adversely affected by, the rights of the holders of shares of any series of preferred stock which the Company may designate and issue in the future.
Treasury Stock
 As of April 30, 2022, the Company had 11,343,518 shares of treasury stock carried at its cost basis of $42.5 million. As of January 31, 2022, the Company had 6,505,334 shares of treasury stock carried at its cost basis of $11.9 million.
Share Repurchase Program
In March 2022, the Company's Board of Directors authorized a $100.0 million share repurchase program of the Company’s common stock. As of April 30, 2022, a total of 4,838,184 shares have been purchased at an average price of $6.32 per share for a total cost of $30.6 million since the commencement of the share repurchase program. As of April 30, 2022, there was approximately $69.4 million that remained available to be purchased under this share repurchase program. Subsequent to April 30, 2022, an additional approximately $24 million has been repurchased, bringing the total amount repurchased under the program to approximately $55 million, and therefore, as of June 9, 2022, approximately $45 million remains available to be purchased under the program.
As part of the share repurchase program, shares may be purchased in open market transactions or pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing, manner, price and amount of any repurchases will be determined at the Company’s discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason. The repurchase program does not obligate the Company to acquire any specific number of shares, and all open market repurchases will be made in accordance with Exchange Act Rule 10b-18, which sets certain restrictions on the method, timing, price and volume of open market stock repurchases.
10. Debt
On March 11, 2020, the Company entered into a credit agreement with Silicon Valley Bank (the “Credit Agreement”). No significant debt issuance costs were incurred in association with the Credit Agreement. In January 2021, the Company amended the Credit Agreement which modified the conditions pursuant to which subsidiaries are required to become guarantors.
The Credit Agreement provides for a senior secured revolving loan facility of up to $50.0 million that matures three years after the effective date, with the right subject to certain conditions to add an incremental revolving loan facility of up to $50.0 million in the aggregate. The three-year revolving loan facility provides for borrowings up to the amount of the facility with sub-limits of up to (i) $30.0 million to be available for the issuance of letters of credit and (ii) $10.0 million to be available for swingline loans.
Under the Credit Agreement, loans bear interest, at the Company's option, at an annual rate based on LIBOR or a base rate. Loans based on LIBOR shall bear interest at a rate between LIBOR plus 2.50% and LIBOR plus 3.00%, depending on the Company's average daily usage of the revolving loan facility. Loans based on the base rate shall bear interest at a rate between the base rate minus 0.50% and the base rate plus 0.00%, depending on the Company's average daily usage of the revolving loan facility.
The obligations under the Credit Agreement are secured by a lien on substantially all of the tangible and intangible property of the Company and by a pledge of all of the equity interests of the Company's material direct and indirect domestic subsidiaries and 66% of each class of capital stock of any material first-tier foreign subsidiaries, subject to limited exceptions.
The Credit Agreement contains customary affirmative and negative covenants and restrictions, as well as financial covenants that require the Company to maintain the year-over-year growth rate of its ordinary course recurring revenue for a trailing four fiscal quarter period above specified rates when certain liquidity thresholds are not met and to maintain a consolidated quick ratio of at least 1.50 to 1.00 tested on a monthly basis.
        As of April 30, 2022, the Company was in compliance with all debt covenants. As of such date, the $50.0 million revolving loan facility had $35.7 million available and $14.3 million in letters of credit allocated as security in connection with office space.
11. Income Taxes
The Company calculates its year-to-date (provision for) benefit from income taxes by applying the estimated annual effective tax rate ("AETR") to year-to-date income or loss from operations before income taxes and adjusts for discrete tax items recorded in the period. During the three months ended April 30, 2022 and 2021, the Company recorded a (provision for) benefit from income taxes of $(0.3) million and $(0.2) million, respectively.
The Company's effective tax rate generally differs from the U.S. federal statutory tax rate primarily due to a full valuation allowance related to the Company's net deferred tax assets in the U.S. and in certain foreign jurisdictions, partially offset by the foreign tax rate differential on non-U.S. income. The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance on a jurisdictional basis if it is more likely than not that some or all the deferred tax assets will not be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as the cumulative loss in recent years, as a significant piece of negative evidence to overcome. To the extent sufficient positive evidence becomes available, a portion of the valuation allowance
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against certain net deferred tax assets could be released in the future and would result in a non-cash income tax benefit in the period of release.
12. Leases
The Company's operating lease arrangements are principally for office space. As of April 30, 2022, the Company had $18.2 million of operating lease liabilities, current, $110.0 million of operating lease liabilities, non-current, $93.6 million of operating lease right-of-use assets, and no financing leases, on its condensed consolidated balance sheet. The operating lease arrangements included in the measurement of lease liabilities do not include short-term leases, and had a weighted-average remaining lease term of 8.5 years and a weighted-average discount rate of 5.9%, as of April 30, 2022. During the three months ended April 30, 2022, the Company paid $5.1 million for amounts included in the measurement of lease liabilities and did not enter into any new lease arrangements.
The Company recognized $6.6 million of lease expense for each the three months ended April 30, 2022 and 2021, which consisted of the following:
Three months ended April 30,
(in thousands)20222021
Operating lease expense$4,280 $4,259 
Short-term lease expense206 188 
Variable lease expense2,145 2,165 
Total lease expense$6,631 $6,612 
Operating lease expense is recognized on a straight-line basis over the term of the arrangement beginning on the lease commencement date for lease arrangements that have an initial term greater than twelve months and therefore are recorded on the balance sheet. Short-term lease expense is recognized on a straight-line basis over the lease term for lease arrangements that have an initial term of 12 months or less and therefore are not recorded on the balance sheet. Variable lease expense is recognized as incurred and includes real estate taxes and utilities, among other office space related expenses.
13. Commitments and Contingencies
Contractual Obligations
The Company is obligated to make payments under certain non-cancelable contractual obligations in the normal course of business. The Company's contractual obligations primarily relate to its operating lease arrangements for office space. Its other contractual obligations include contracts with its Knowledge Network application providers, which generally have a term of one year, although some have a term of several years, and its software vendors, among others. These obligations represent minimum contractual payments, or the Company's best estimate for variable elements based on historical payments. The Company's contractual obligations have various expiry dates between fiscal years 2023 and 2035.
        As of April 30, 2022, the Company's contractual obligations are as follows (in thousands):
Fiscal year ending January 31:Operating LeasesOther
2023 (remainder of fiscal year)
$14,248 $27,556 
202418,788 17,161 
202518,324 9,186 
202619,177 1,834 
202719,273 1,538 
2028 and thereafter75,160 394 
Total$164,970 $57,669 
Legal Proceedings
       The Company is and may be involved in various legal proceedings arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, currently, in the opinion of the Company, the likelihood of any material adverse impact on the Company's results of operations, cash flows or the Company's financial position for any such litigation or claims is deemed to be remote. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors.
Warranties and Indemnifications
The Yext platform is in some cases warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company's product specifications.
The Company's arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third-party's intellectual property rights and/or if the Company breaches its contractual agreements with a customer
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or in instances of negligence, fraud or willful misconduct by the Company. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying condensed consolidated financial statements.
The Company has also agreed to indemnify certain of its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person's service as a director or officer, including any action by the Company, arising out of that person's services as the Company's director or officer or that person's services provided to any other company or enterprise at the Company's request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.
14. Net Loss Per Share Attributable to Common Stockholders
The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders:
Three months ended April 30,
(in thousands, except share and per share data)20222021
Numerator:
     Net loss attributable to common stockholders$(25,839)$(17,631)
Denominator:
     Weighted-average common shares outstanding131,144,055125,372,839
Net loss per share attributable to common stockholders, basic and diluted$(0.20)$(0.14)
        Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Unvested restricted stock and restricted stock units are excluded from the denominator of basic net loss per share. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares plus common equivalent shares for the period, including any dilutive effect from such shares.
        Since the Company was in a net loss position for all periods presented, net loss per share attributable to common stockholders was the same on a basic and diluted basis, as the inclusion of all potential common equivalent shares outstanding would have been anti-dilutive. Anti-dilutive common equivalent shares were as follows:
As of April 30,
20222021
Options to purchase common stock5,562,682 7,802,579 
Restricted stock and restricted stock units10,282,007 8,378,889 
Shares estimated to be purchased under ESPP340,938 213,434 
Performance-based restricted stock units2,000,000  
Total anti-dilutive common equivalent shares18,185,627 16,394,902 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022, filed with the SEC on March 18, 2022. As discussed in the section titled "Special Note Regarding Forward Looking Statements," the following discussion and analysis contains forward looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section titled "Risk Factors" under Part II, Item 1A in this Quarterly Report on Form 10-Q.
Overview
Yext organizes a business's facts so it can provide official answers to consumer questions starting with the business's own website and then extending across search engines and voice assistants. Our platform lets businesses structure the facts about their brands in a database called the Knowledge Graph. Our platform is built to leverage the structured data stored in the Knowledge Graph to deliver a modern search experience on a business's or organization's own website, as well as across approximately 200 service and application providers, which we refer to as our Knowledge Network and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp. Our platform powers all of our key features, including Listings, Pages, and Answers, along with its other features and capabilities.
We sell our platform throughout the world to customers of all sizes, including our enterprise, mid-size, and third-party reseller customers. In transactions with resellers, we are only party to the transaction with the reseller and are not a party to the reseller's transaction with its customer.
Revenue is a function of the number of customers, the number of licenses with each customer, the package to which each customer subscribes, the price of the package and renewal rates. We offer subscriptions in a discrete range of packages, with pricing based on specified feature sets and the number of licenses managed by the customer as well as on a capacity-basis.
Fiscal Year
Our fiscal year ends on January 31st. References to fiscal 2023, for example, are to the fiscal year ending January 31, 2023.
COVID-19 Update
The COVID-19 pandemic has significantly disrupted business operations for us and our customers, as well as suppliers, and other parties with whom we do business. Such disruptions are expected to continue for an indefinite period of time.
We have adopted several measures in response to the COVID-19 pandemic and continue to monitor regional developments to inform our operational decisions. Our offices have been open on a voluntary basis in accordance with guidance provided by government agencies, although currently the majority of our employees are still working remotely. While we continue to hold virtual events, we have also resumed in-person marketing events. The uncertain duration of these measures have had and may continue to have negative effects on our sales efforts and revenue growth rates. We continue to be committed to our business, the strength of our platform, our ability to continue to execute on our strategy, and our efforts to support our customers.
We may continue to see some existing and potential customers, in particular customers in industries and geographies that have been highly impacted by the pandemic, may reduce, suspend or delay technology spending, request to renegotiate contracts to obtain concessions such as, extended billing and payment terms; shorten the duration of contracts; or elect not to renew their subscriptions which could materially adversely impact our business, financial condition and results of operations in future periods. The ultimate extent of the impact of the pandemic will depend on future developments, which continue to be highly uncertain and cannot be predicted, including the severity and duration of the COVID-19 pandemic and its variants, vaccination rates and efficacy and the actions taken to contain and address the impact of the pandemic, among others. However, because we generally recognize revenue from our customer contracts ratably over the term of the contract, changes in our contracting activity in the near term may not be fully reflected in our results of operations and overall financial performance until future periods. See Part II Item 1A “Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on our business.
Components of Results of Operations
Revenue
We derive our revenue primarily from subscription and associated support to our Yext platform. Our contracts are typically one year in length, but may be up to three years or longer in length. Revenue is a function of the number of customers, the number of licenses or capacity purchased by each customer, the package to which each customer subscribes, the price of the package and renewal rates. Revenue is generally recognized ratably over the contract term beginning on the commencement date of each contract, which is the date our platform is made available to customers. At the beginning of each subscription term we invoice our customers, typically in annual installments, but also monthly, quarterly, and semi-annually. Amounts that have been invoiced for non-cancelable contracts
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are recorded in accounts receivable and unearned revenue. Unearned revenue is subsequently recognized as revenue when transfer of control to a customer has occurred.
Cost of Revenue
Cost of revenue consists primarily of employee-related costs, including personnel-related costs, which mainly consist of salaries and wages, and stock-based compensation expense. Cost of revenue also includes fees associated with our Knowledge Network application provider arrangements, the nature of which may be unpaid, fixed, or variable, and are unpaid with many of our larger providers, as well as the costs associated with our data centers. In addition, cost of revenue includes depreciation expense, including with respect to certain capitalized software development costs incurred in connection with additional functionality to our platform. Cost of revenue also includes lease expenses associated with our office spaces, which are allocated based on employee headcount. In addition, cost of revenue includes software expense, which relates to licenses, professional services, and other costs associated with software for use in the operations of our business, which is also allocated based on employee headcount.
Operating Expenses
Sales and marketing expenses. Sales and marketing expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense. Personnel-related costs mainly consist of salaries and wages and costs of obtaining revenue contracts. Sales and marketing expenses also include lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount. In addition, sales and marketing expenses include costs related to advertising and conferences and brand awareness events.
Research and development expenses. Research and development expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense. Personnel-related costs mainly consist of salaries and wages. Capitalized software development costs related to additional functionality to our platform are excluded from research and development expenses as they are capitalized as a component of property and equipment, net and depreciated to cost of revenue over the term of their useful life. Research and development expenses also include lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount.
General and administrative expenses. General and administrative expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense for our finance and accounting, human resources, information technology and legal support departments. Personnel-related costs mainly consist of salaries and wages. General and administrative expenses also include lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount, and other professional related costs.
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Results of Operations
The following table sets forth selected condensed consolidated statement of operations data for each of the periods indicated:
Three months ended April 30,
(in thousands)20222021
Revenue
$98,802 $91,992 
Cost of revenue(1)
24,728 21,854 
 Gross profit
74,074 70,138 
Operating expenses:
 Sales and marketing(1)
60,779 55,166 
 Research and development(1)
17,302 13,857 
 General and administrative(1)
21,495 18,347 
 Total operating expenses
99,576 87,370 
Loss from operations(25,502)(17,232)
Interest income25 
Interest expense(143)(132)
Other expense, net129 (86)
Loss from operations before income taxes
(25,491)(17,444)
(Provision for) benefit from income taxes(348)(187)
Net loss
$(25,839)$(17,631)

(1)Amounts include stock-based compensation expense as follows:
Three months ended April 30,
(in thousands)20222021
Cost of revenue$1,382 $1,445 
Sales and marketing6,376 5,501 
Research and development4,520 3,988 
General and administrative5,808 3,664 
Total stock-based compensation expense$18,086 $14,598 
The following table sets forth selected condensed consolidated statements of operations data for each of the periods indicated as a percentage of total revenue:
Three months ended April 30,
20222021
Revenue100 %100 %
Cost of revenue25 24 
 Gross profit75.0 76.2 
Operating expenses:
 Sales and marketing62 60 
 Research and development17 15 
 General and administrative22 20 
 Total operating expenses101 95 
Loss from operations(26)(19)
Interest income— — 
Interest expense— — 
Other expense, net— — 
Loss from operations before income taxes(26)(19)
(Provision for) benefit from income taxes — — 
Net loss(26)%(19)%
Note: Numbers rounded for presentation purposes and may not sum.

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Three Months Ended April 30, 2022 Compared to Three Months Ended April 30, 2021
Revenue and Cost of Revenue
Three months ended April 30,Variance
(in thousands)20222021DollarsPercent
 Revenue
$98,802 $91,992 $6,810 %
 Cost of revenue
24,728 21,854 $2,874 13 %
 Gross profit
$74,074 $70,138 $3,936 %
 Gross margin
75.0 %76.2 %
Total revenue was $98.8 million for the three months ended April 30, 2022, compared to $92.0 million for the three months ended April 30, 2021, an increase of $6.8 million or 7%, primarily driven by new customer subscriptions to our platform, as well as expanded subscriptions for existing customers. For the three months ended April 30, 2022 and 2021, revenue recognized from subscriptions and associated support to our platform was 91% and revenue recognized from professional services was 9%, compared to 92% and 8%, respectively.
Cost of revenue was $24.7 million for the three months ended April 30, 2022, compared to $21.9 million for the three months ended April 30, 2021, an increase of $2.9 million or 13%. The increase was driven by a $2.0 million increase in personnel-related costs, reflecting higher headcount, and a $0.8 million increase in depreciation expense.
Gross margin was 75.0% for the three months ended April 30, 2022, compared to 76.2% for the three months ended April 30, 2021 as reflected in the discussion above.
Operating Expenses
Three months ended April 30,Variance
(in thousands)20222021DollarsPercent
 Sales and marketing$60,779 $55,166 $5,613 10 %
 Research and development$17,302 $13,857 $3,445 25 %
 General and administrative$21,495 $18,347 $3,148 17 %
Sales and marketing expense was $60.8 million for the three months ended April 30, 2022, compared to $55.2 million for the three months ended April 30, 2021, an increase of $5.6 million or 10%. The increase was primarily due to employee-related costs, including a $2.7 million increase in personnel-related costs and a $0.9 million increase stock-based compensation expense. In addition, conferences and events increased $1.9 million and employee travel increased $1.6 million due to increased in-person events compared to the prior period. These increases were partially offset by a $0.8 million decrease in advertising costs due to certain brand media campaigns in the prior period.
Research and development expense was $17.3 million for the three months ended April 30, 2022, compared to $13.9 million for the three months ended April 30, 2021, an increase of $3.4 million or 25%. The increase was primarily due to by employee-related costs, including a $2.3 million increase in personnel-related costs and a $0.5 million increase in stock-based compensation expense.
General and administrative expense was $21.5 million for the three months ended April 30, 2022, compared to $18.3 million for the three months ended April 30, 2021, an increase of $3.1 million or 17%. The increase was primarily due to employee-related costs, including a $2.1 million increase in stock-based compensation expense, as well as a $1.5 million increase in personnel-related costs which reflected higher headcount. This was partially offset by a $0.8 million decrease in bad debt expense, which reflects a lower allowance for doubtful accounts in comparison to the prior period, which had been more strongly impacted by COVID-19.
Net Loss
Net loss was $25.8 million and $17.6 million for the three months ended April 30, 2022 and 2021, respectively.
Non-GAAP Net Loss
In addition to our financial results determined in accordance with GAAP, we believe that non-GAAP net loss is useful in evaluating our operating performance and our business.
Non-GAAP net loss is a financial measure that is not calculated in accordance with GAAP. We define non-GAAP net loss as our GAAP net loss as adjusted to exclude the effects of stock-based compensation expense. We believe non-GAAP net loss provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of our results of operations. We also believe non-GAAP net loss is useful in evaluating our operating performance compared to that of other companies in our industry, as it eliminates the effects of stock-based compensation, which may vary for reasons unrelated to overall operating performance.
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We use non-GAAP net loss in conjunction with traditional GAAP net loss as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, and to evaluate the effectiveness of our business strategies. Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish this or similar metrics. Thus, our non-GAAP net loss should be considered in addition to, not as a substitute for, nor superior to or in isolation from, measures prepared in accordance with GAAP.
Non-GAAP net loss may be limited in its usefulness because it does not present the full economic effect of our use of stock-based compensation expense. We compensate for these limitations by providing a reconciliation of non-GAAP net loss to the most closely related GAAP financial measure. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non-GAAP net loss in conjunction with GAAP net loss.
The following table provides a reconciliation of GAAP net loss to non-GAAP net loss:
Three months ended April 30,
(in thousands)20222021
Net loss$(25,839)$(17,631)
Plus: Stock-based compensation expense18,086 14,598 
Non-GAAP net loss$(7,753)$(3,033)
Liquidity and Capital Resources
As of April 30, 2022, our principal sources of liquidity were cash and cash equivalents of $247.8 million. We believe our existing cash and cash equivalents will be sufficient to meet our projected operating requirements for at least the next 12 months. Our cash flows, including net cash used in or provided by operating activities, may vary significantly from quarter to quarter, due to the timing of billings, cash collections and lease payments, significant marketing events and related expenses, and the potential effects of the COVID-19 pandemic, among other factors.
Our future capital requirements will depend on many factors, including those set forth under "Risk Factors." We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies, and intellectual property rights. In addition, we may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected.
Credit Arrangements
On March 11, 2020, we entered into a credit agreement with Silicon Valley Bank (the “Credit Agreement”). No significant debt issuance costs were incurred in association with the Credit Agreement. In January 2021, we amended the Credit Agreement which modified the conditions pursuant to which subsidiaries are required to become guarantors.
The Credit Agreement provides for a senior secured revolving loan facility of up to $50.0 million that matures three years after the effective date, with the right subject to certain conditions to add an incremental revolving loan facility of up to $50.0 million in the aggregate. The three-year revolving loan facility provides for borrowings up to the amount of the facility with sub-limits of up to (i) $30.0 million to be available for the issuance of letters of credit and (ii) $10.0 million to be available for swingline loans.
Under the Credit Agreement, loans bear interest, at our option, at an annual rate based on LIBOR or a base rate. Loans based on LIBOR shall bear interest at a rate between LIBOR plus 2.50% and LIBOR plus 3.00%, depending on our average daily usage of the revolving loan facility. Loans based on the base rate shall bear interest at a rate between the base rate minus 0.50% and the base rate plus 0.00%, depending on our average daily usage of the revolving loan facility. See Part II Item 1A “Risk Factors - Our credit facility contains restrictive covenants that may limit our operating flexibility" for discussion of LIBOR being phased out.
The obligations under the Credit Agreement are secured by a lien on substantially all of our tangible and intangible property and by a pledge of all of our equity interests of material direct and indirect domestic subsidiaries and 66% of each class of capital stock of any material first-tier foreign subsidiaries, subject to limited exceptions.
The Credit Agreement contains customary affirmative and negative covenants and restrictions, as well as financial covenants that require us to maintain the year-over-year growth rate of its ordinary course recurring revenue for a trailing four fiscal quarter period above specified rates when certain liquidity thresholds are not met and to maintain a consolidated quick ratio of at least 1.50 to 1.00 tested on a monthly basis.
        As of April 30, 2022, we were in compliance with all debt covenants. As of such date, the $50.0 million revolving loan facility had $35.7 million available and $14.3 million in letters of credit allocated as security in connection with office space.
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Share Repurchase Program
In March 2022, our Board of Directors authorized a $100.0 million share repurchase program of our common stock. As of April 30, 2022, a total of 4,838,184 shares have been purchased at an average price of $6.32 per share for a total cost of $30.6 million since the commencement of the share repurchase program. As of April 30, 2022, there was approximately $69.4 million that remained available to be purchased under this share repurchase program. Subsequent to April 30, 2022, an additional approximately $24 million has been repurchased, bringing the total amount repurchased under the program to approximately $55 million, and therefore, as of June 9, 2022, approximately $45 million remains available to be purchased under the program.
Cash Flows
The following table summarizes our cash flows:
Three months ended April 30,
(in thousands)20222021
 Net cash provided by operating activities
$17,861 $35,063 
 Net cash used in investing activities
$(1,644)$(7,457)
 Net cash (used in) provided by financing activities
$(26,293)$13,607 
Operating Activities
Net cash provided by operating activities of $17.9 million for the three months ended April 30, 2022 was primarily due to positive adjustments in reconciling our net loss of $25.8 million to net cash provided by operating activities, including changes in accounts receivable of $42.7 million, mainly due to timing of billing and cash collections during the period, as well as changes in accounts payable, accrued expenses and other current liabilities of $5.0 million and changes in costs to obtain revenue contracts of $4.4 million. In addition, there were positive non-cash adjustments related to stock-based compensation expense of $18.1 million, depreciation and amortization expense of $4.4 million, and amortization of operating lease right-of-use assets of $2.4 million. These increases were partially offset by changes in unearned revenue of $24.5 million, prepaid expenses and other current assets of $5.7 million, and operating lease liabilities of $3.2 million.
Net cash provided by operating activities of $35.1 million for the three months ended April 30, 2021 was primarily due to positive adjustments in reconciling our net loss of $17.6 million to net cash provided by operating activities, including changes in accounts receivable of $41.9 million, mainly due to timing of billing and cash collections during the period, stock-based compensation expense of $14.6 million, depreciation and amortization expense of $3.7 million, and amortization of operating lease right-of-use assets of $2.3 million. These increases were partially offset by changes in costs to obtain revenue contracts of $5.5 million and unearned revenue of $5.2 million.
Investing Activities
Net cash used in investing activities of $1.6 million for the three months ended April 30, 2022 reflected capital expenditures.
Net cash used in investing activities of $7.5 million for the three months ended April 30, 2021 reflected capital expenditures associated with our new office spaces, primarily our new corporate headquarters in New York, NY, among others.
Financing Activities
Net cash used in financing activities of $26.3 million for the three months ended April 30, 2022 was primarily related to $27.1 million in cash outflows associated with repurchases of common stock as part of our share repurchase program. This was partially offset by net proceeds from employee stock purchase plan withholdings of $0.6 million and proceeds from exercise of stock options of $0.3 million.
Net cash provided by financing activities of $13.6 million for the three months ended April 30, 2021 was primarily related to proceeds from exercise of stock options of $12.2 million and net proceeds from employee stock purchase plan withholdings of $1.5 million.
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Contractual Obligations
We are obligated to make payments under certain non-cancelable contractual obligations in the normal course of business. Our contractual obligations primarily relate to our operating lease arrangements for office space. Our other contractual obligations include contracts with our Knowledge Network application providers, which generally have a term of one year, although some have a term of several years, as well as contracts with our software vendors, among others. These obligations represent minimum contractual payments, or our best estimate for variable elements based on historical payments. Our contractual obligations have various expiry dates between fiscal years 2023 and 2035.
        As of April 30, 2022, future minimum payments under these contractual obligations are as follows (in thousands):
Fiscal year ending January 31:Operating LeasesOther
2023 (remainder of fiscal year)$14,248 $27,556 
202418,788 17,161 
202518,324 9,186 
202619,177 1,834 
202719,273 1,538 
2028 and thereafter75,160 394 
Total$164,970 $57,669 
See Note 13 "Commitments and Contingencies", to our condensed consolidated financial statements for further discussion on contractual obligations.
Critical Accounting Policies and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
There have been no material changes to our critical accounting policies and estimates as compared to those disclosed in our Annual Report on Form 10-K.
Recent Accounting Pronouncements
See Note 2 "Summary of Significant Accounting Policies- Recent Accounting Pronouncements", to the condensed consolidated financial statements for our discussion about adopted and pending recent accounting pronouncements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Market risk represents the risk of loss that may affect our financial position due to adverse changes in financial market prices and rates. We are exposed to market risks related to foreign currency exchange rates, inflation and interest rates.
Foreign Currency Risk
Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where the local currency is the functional currency, are translated from foreign currencies into U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates for the period derived from month-end spot rates for revenue, costs and expenses. We record translation gains and losses in accumulated other comprehensive (loss) income as a component of stockholders' equity. We reflect net foreign exchange transaction gains and losses resulting from the conversion of the transaction currency to functional currency as a component of foreign currency exchange losses in other expense, net. Based on the size of our international operations and the amount of our expenses denominated in foreign currencies, we would not expect a 10% change in the value of the U.S. dollar from rates on April 30, 2022 to have a material effect on our financial position or results of operations. These exposures may change over time as business practices evolve and economic conditions change, including market impacts associated with COVID-19.
Inflation Risk
We do not believe that inflation has had a material effect on our business, financial condition or results of operations, other than its impact on the general economy. Nonetheless, if our costs, in particular personnel-related costs, were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.
Interest Rate Risk
As of April 30, 2022, we had cash and cash equivalents of $247.8 million. The primary objective of our investments is the preservation of capital to fulfill liquidity needs. We do not enter into investments for trading or speculative purposes.
We do not believe our cash equivalents have significant risk of default or illiquidity. While we believe our cash equivalents do not contain excessive risk, we cannot assure you that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash and cash equivalents at one or more financial institutions that are in excess of federally insured limits and are exposed to counterparty risk. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our financial statements.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure. Based on the evaluation of our disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of April 30, 2022.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended April 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Disclosure Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. The inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.


27


PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
We are not currently a party to any legal proceedings that are material to our business or financial condition. From time to time we may become party to various litigation matters and subject to claims that arise in the ordinary course of business.
Item 1A. Risk Factors
You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and related notes, before making a decision to invest in our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect our business. If any of the following risks occur, our business, financial condition, operating results and prospects could be materially harmed. In that event, the price of our common stock could decline, and you could lose part or all of your investment.
Risk Factor Summary
This risk factor summary contains a high-level summary of risks associated with our business, but does not address all of the risks that we face. Additional discussion of the risks summarized below, and other risks that we face, may be found immediately following this summary.
Risks Related to Our Business and Industry
Our revenue growth rate has slowed in recent periods.
We have a history of losses and may not achieve profitability in the future.
Adverse economic conditions or reduced technology spending may adversely impact our business.
The effects of the COVID-19 pandemic have had and are expected to continue to have an adverse effect on our business, operations and financial results as well as the business and operations of our customers and potential customers.
Because we recognize revenue from subscriptions for our platform over the term of the subscription, downturns or upturns in new business may not be immediately reflected in our operating results.
We have a limited operating history and our business has evolved, which makes it difficult to predict our future operating results.
We have experienced significant changes to our organization and structure and may not be able to effectively manage such changes.
Failure to adequately manage our sales force will impede our growth.
We have expanded and intend to continue to expand our international operations, which exposes us to significant risks.
Our growth depends in part on the success of our strategic relationships with existing and prospective Knowledge Network application providers.
Changes in our pricing models could adversely affect our operating results.
Our success depends on a fragmented internet environment for finding information, particularly information about busin