What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-13 compared with 2024-03-13 · 170 added, 80 removed, 276 unchanged (48% of the section changed)

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Our digital presence platform (also known as the Answers Platform) lets businesses structure and organize information about their brands in our knowledge graph, Yext Content (also known as the Knowledge Graph), which is then delivered across first-and third-party websites and applications through our network of over 200 service and application providers, which we refer to as our Publisher Network.

These publishers include, among others, Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp.

These publishers include, among others, Amazon Alexa, Apple, Bing, Facebook, Google, and Yelp.

Our platform powers all of our key products, including Listings, Reviews, Pages and Search, each with robust analytics capabilities for businesses to easily track performance across customer experiences.

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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.

In August 2024, we acquired Hearsay Social, Inc., a digital client engagement platform for financial services ("Hearsay").

See Note 4 "Business Combination" to our consolidated financial statements for additional information.

Our fiscal year ends on January 31 st .

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Macroeconomic Conditions

Our results of operations have been and may continue to be influenced by general macroeconomic conditions, including, but not limited to, the impact of foreign currency fluctuations, interest rates, inflation, recession risks and public health emergencies, such as the COVID-19 pandemic.

Fluctuations in foreign exchange rates and rising inflation have had, and may continue to have an adverse impact on our financial condition and operating results in future periods.

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Therefore, 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.

Recent Developments

On June 4, 2024, we committed to a restructuring plan in response to evolving business needs to reduce operating expenses and position Yext for profitable future growth (the “Plan”).

The Plan reduced the size of our workforce by approximately 12 percent of our full-time employees as compared to our headcount as of January 31, 2024.

We incurred approximately $5 million in costs in connection with the Plan during our second quarter of fiscal year 2025, consisting primarily of severance payments, payments in lieu of notice, employee benefits and related costs.

Following approval by our Board of Directors, on June 10, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) for the acquisition of Hearsay Social, Inc.

Pursuant to the Merger Agreement, Hearsay became a wholly owned subsidiary of Yext upon closing of the transaction on August 1, 2024.

The acquisition of Hearsay is intended to produce an end-to-end digital presence platform, combining Yext’s cutting-edge digital presence management capabilities with Hearsay’s compliant engagement solutions across social media, websites, text, and voice.

We acquired Hearsay for approximately $125 million

in cash, as adjusted for customary adjustments set forth in the Merger Agreement and the assumption of Hearsay employee equity awards.

We also offered participation rights to key employees and former founders of Hearsay in a bonus pool of $20 million that can be settled in cash or our common stock and shall be subject to 100% vesting on the first anniversary of closing, generally subject to continued employment.

In addition, subject to the terms of the Merger Agreement, we may also be required to pay additional contingent consideration of up to $75 million to Hearsay based on the achievement of certain milestones (the “Earnout”).

The Earnout shall be payable based on achievement of certain annual recurring revenue targets.

The targets shall be measured at the end of the first and second anniversaries of closing.

The Earnout may be settled in cash or our common stock at our election.

See Note 4 "Business Combination" to our consolidated financial statements for additional information.

On February 7, 2025, we completed an acquisition of KabanaSoft, LLC, doing business as Places Scout (“Places Scout”), for a purchase price of $20.3 million in cash, subject to customary adjustments as set forth in the Unit Purchase Agreement.

The acquisition strengthens Yext’s ability to provide best-in-class competitive intelligence, benchmarking, and AI-powered insights.

In addition, subject to the terms of the Unit Purchase Agreement, we agreed to grant approximately $10.0 million of incentive equity, based on current trading prices of Yext’s common stock, to certain key employees of Places Scout.

See Part I Item 1A “Risk Factors” for further discussion of the possible impact of the current macroeconomic conditions on our business.

We monitor the following key operational and financial metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.

Customer Count

Customer count is defined as the total number of customers with contracts executed as of the last day of the reporting period and a unique administrative account identifier on our platform.

Generally, we assign unique administrative accounts to each separate and distinct entity (such as a company or government institution) or a business unit of a large corporation, that has its own separate contract with us to access our platform.

We believe that customer count provides insight into our ability to grow our enterprise and mid-size customer base.

As such, customer count excludes third-party reseller customers and small business customers as well as customers only receiving free trials.

From time to time, some customers previously characterized as small business customers may

transition to mid-size customers, and customer count includes these changes resulting from any recharacterization.

As of January 31, 2024, customer count was approximately 3,000.

Annual Recurring Revenue ("ARR")

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The calculation assumes no subsequent changes to the existing subscription.

The calculation includes the annualized contractual minimum commitment and excludes amounts related to overages above the contractual minimum commitment.

The calculation includes the annualized contractual minimum commitment and amounts related to usage above the contractual minimum commitment.

Contracts include portions of professional services contracts that are recurring in nature.

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The recurring amount of a contract is determined based upon the terms of a contract and is calculated by dividing the amount of a contract by the term of the contract and then annualizing such amount.

The calculation assumes no subsequent changes to the existing subscription, and where relevant, includes the annualized contractual minimum commitment and excludes amounts related to overages above the contractual minimum commitment.

The calculation assumes no subsequent changes to the existing subscription, and where relevant, includes the annualized contractual minimum commitment and amounts related to usage above the contractual minimum commitment.

Contracts include portions of professional services contracts that are recurring in nature.

We calculate usage by annualizing monthly amounts in excess of contractual minimum commitments in the current month.

ARR is independent of historical revenue, unearned revenue, remaining performance obligations or any other accounting principles generally accepted in the United States of America, ("GAAP"), financial measure over any period.

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We believe ARR-based metrics provides insight into the performance of our recurring revenue business model while mitigating fluctuations in billing and contract terms.

The following table provides our ARR for the periods presented:

January 31, Variance

2024 2023 Dollars Percent

Annual Recurring Revenue

(in thousands) 2025 2024 Dollars Percent

Direct Customers (1)

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Total Annual Recurring Revenue $ 442,662 $ 392,182 $ 50,480 13 %

(1) ARR as of January 31, 2024 includes a decrease of $10.8 million related to the attrition of a large customer, which occurred during the three months ended January 31, 2024.

(1) ARR as of January 31, 2025 is inclusive of Hearsay's results.

Change in ARR Methodology

From time to time, we may refine our methodology of calculating our key performance metrics to better reflect our business.

For example, beginning in the fourth quarter of fiscal year 2025, we refined our ARR methodology to include usage to align with management’s internal assessment of customers.

Prior to that quarter, we had excluded what we previously referred to as overage.

While this change may introduce additional volatility, we believe it provides a more comprehensive view of ARR that better aligns with the way we evaluate and manage our business.

The amounts presented in the immediately preceding table have been restated to reflect our ARR presented on this current definition for periods previously disclosed that did not include overage.

To accompany the transition to this new presentation, the following table presents our ARR for the periods presented as calculated using our prior definition of ARR, which excluded usage:

January 31, Variance

(in thousands) 2025 2024 Dollars Percent

Direct Customers (1)

$ 368,201 $ 315,594 $ 52,607 17 %

Third-Party Reseller Customers 67,459 71,784 (4,325) (6) %

Total Annual Recurring Revenue $ 435,660 $ 387,378 $ 48,282 12 %

(1) ARR as of January 31, 2025 is inclusive of Hearsay's results.

Dollar-Based Net Retention Rate

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The current period ARR is then divided by the prior period ARR to arrive at our dollar-based net retention rate.

Any ARR obtained through merger and acquisition transactions does not affect the dollar-based net retention rate until one year from the date on which the transaction closed.

The cohorts of customers that we present dollar-based net retention rate for include direct, third-party reseller, and total customers.

Direct customers include enterprise, mid-size and small business customers.

The following table provides our dollar-based net retention rate for the fiscal years ended January 31, 2024 and 2023:

Dollar-Based Net Retention Rate (ARR)

The following table provides our dollar-based net retention rate for the periods presented:

Direct Customers

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Total Customers 93% 92%

(1) Dollar-Based Net Retention Rate as of January 31, 2024 reflects the attrition of a large customer, which occurred during the three months ended January 31, 2024.

Change in Dollar-Based Net Retention Rate Methodology

From time to time, we may refine our methodology of calculating our key performance metrics to better reflect our business.

For example, beginning in the fourth quarter of fiscal year 2025, we refined our ARR calculation methodology to include usage.

This update resulted in a corresponding change in our dollar-based net retention rate, which is based on ARR.

While this change may

introduce additional variability due to changes in customer usage, it provides a more comprehensive view of our dollar-based net retention rate.

The amounts presented in the immediately preceding table have been restated to reflect our dollar-based net retention rate presented as measured on our current definition of ARR for periods previously disclosed that did not include overage.

To accompany the transition to this new presentation, the following table presents our dollar-based net retention rate for the periods presented as calculated using our prior definition of ARR, which excluded usage:

Direct Customers

Third-Party Reseller Customers 92% 95%

Total Customers 92% 92%

Customer Count

Customer count is defined as the total number of customers with contracts executed as of the last day of the reporting period and a unique administrative account identifier on our platform.

Historically, we believed that customer count provided insight into our ability to grow our enterprise and mid-size customer base.

As such, customer count excluded third-party reseller customers and small business customers as well as customers only receiving free trials.

From time to time, some customers previously characterized as small business customers transitioned to mid-size customers, and customer count included these changes resulting from any recharacterization.

We no longer consider customer count to be a key performance measure of our business.

As such, we are presenting customer count as of the end of January 31, 2025 as a key metric, but we do not expect to refer to it regularly in the future.

As of January 31, 2025, customer count was approximately 2,920.

Components of Results of Operations

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In addition, cost of revenue includes depreciation expense, which includes amounts allocated based on employee headcount, as well as amounts related 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.

Cost of revenue also includes amortization expense, which includes amounts related to intangible assets arising from acquisitions and 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.

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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.

In addition, sales and marketing expenses include amortization expense, which includes amounts related to intangible assets arising from acquisitions, as well as costs related to advertising and conferences and brand awareness events.

Research and development expenses .

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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.

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.

In addition, general and administrative expenses include other professional related costs, which include acquisition-related costs, as well as fair value adjustments related to contingent consideration.

Results of Operations

In this section, we discuss the results of our operations for the fiscal year ended January 31, 2025 compared to the fiscal year ended January 31, 2024.

For a discussion of our results of operations for the fiscal year ended January 31, 2023 compared to the fiscal year ended January 31, 2022, please refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023.

For a discussion of our results of operations for the fiscal year ended January 31, 2024 compared to the fiscal year ended January 31, 2023, see Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.

The following table sets forth selected consolidated statement of operations data for each of the periods indicated:

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(28,058) (338)

Provision for income taxes (2,292) (2,080)

$ (2,630) $ (65,938)

(1) Amounts include stock-based compensation expense as follows:

Fiscal year ended January 31,

(in thousands) 2024 2023

Cost of revenue

$ 2,900 $ 5,042

Sales and marketing

15,067 22,961

Research and development

11,349 16,401

General and administrative 15,645 18,674

Total stock-based compensation expense

Benefit from (provision for) income taxes 110 (2,292)

$ (27,948) $ (2,630)

(1) See Note 10 "Stock-Based Compensation" to the consolidated financial statements for amounts included.

The following table sets forth selected consolidated statements of operations data for each of the periods indicated as a percentage of total revenue:

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Loss from operations before income taxes (7) —

Provision for income taxes (1) —

Benefit from (provision for) income taxes — (1)

Net loss (7) % (1) %

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77.1 % 78.4 %

Total revenue was $404.3 million for the fiscal year ended January 31, 2024, compared to $400.9 million for the fiscal year ended January 31, 2023, an increase of $3.5 million or 1%, primarily driven by new customer subscriptions to our platform, expanded subscriptions for existing customers, and the impact of foreign currency exchange rates as discussed below.

Total revenue was $421.0 million for the fiscal year ended January 31, 2025, compared to $404.3 million for the fiscal year ended January 31, 2024, an increase of $16.6 million or 4%.

The increase was entirely driven by the inclusion of Hearsay’s revenue as a result of the acquisition which did not exist in the comparative period.

The increase was negatively affected by the resulting absence of revenue from the attrition of a large customer that did not renew their contract as of January 31, 2024.

Revenue recognized from subscriptions and associated support to our platform was 93% and 92%, while revenue recognized from professional services was 7% and 8%, for the fiscal years ended January 31, 2025 and 2024, respectively.

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Total Revenue $ 420,957 $ 404,322 $ 16,635 4 %

Revenue attributable to direct customers was $327.1 million for the fiscal year ended January 31, 2024, compared to $318.0 million for the fiscal year ended January 31, 2023, an increase of $9.1 million or 3%, primarily driven by new customer subscriptions to our platform, as well as expanded subscriptions for existing customers.

While the attrition of a large direct customer occurred during the three months ended January 31, 2024, we expect that the corresponding absence of revenue from this customer

will become more apparent in our quarterly results for the fiscal year ending January 31, 2025.

Revenue attributable to direct customers was $347.0 million for the fiscal year ended January 31, 2025, compared to $327.1 million for the fiscal year ended January 31, 2024, an increase of $19.9 million or 6%.The increase was entirely driven by the inclusion of Hearsay’s revenue as a result of the acquisition which did not exist in the comparative period.

The increase was negatively

affected by the resulting absence of revenue from the attrition of a large customer that did not renew their contract as of January 31, 2024.

Revenue attributable to third-party reseller customers was $74.0 million for the fiscal year ended January 31, 2025, compared to $77.2 million for the fiscal year ended January 31, 2024, a decrease of $3.2 million or 4% primarily due to customer attrition.

Cost of Revenue and Gross Margin

Cost of revenue was $87.5 million for the fiscal year ended January 31, 2024, compared to $104.0 million for the fiscal year ended January 31, 2023, a decrease of $16.5 million, or 16%.

The decrease was primarily driven by employee related costs, as personnel-related costs decreased $11.3 million and stock-based compensation expense decreased $2.1 million, reflecting lower headcount.

In addition, depreciation expense decreased $2.1 million as certain assets have fully depreciated.

Cost of revenue was $96.4 million for the fiscal year ended January 31, 2025, compared to $87.5 million for the fiscal year ended January 31, 2024, an increase of $8.9 million, or 10%.

The increase was primarily driven by the acquisition of Hearsay, which resulted in a $4.0 million increase in amortization expense related to acquired intangible assets, as well as a $1.3 million increase related to royalties and integration fees.

In addition, data center costs increased $2.4 million, and professional related costs increased $1.6 million.

These increases were offset by a $2.0 million decrease in depreciation expense, as certain assets have fully depreciated.

Gross margin was 77.1% for the fiscal year ended January 31, 2025, compared to 78.4% for the fiscal year ended January 31, 2024 as reflected in the discussion above.

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Sales and marketing expense was $174.8 million for the fiscal year ended January 31, 2025, compared to $178.8 million for the fiscal year ended January 31, 2024, a decrease of $4.1 million, or 2%.

The decrease was primarily driven by employee-related costs, as personnel-related costs decreased $20.2 million and stock-based compensation expense decreased $7.9 million, reflecting lower headcount.

In addition, conferences and events decreased $1.3 million.

The decrease was primarily driven by a $1.9 million decrease in personnel-related costs, reflecting lower headcount, a $1.4 million decrease in depreciation expense as certain assets have fully depreciated, a $1.3 million decrease in employee travel and a $1.2 million decrease in lease expense.

In addition, there were smaller decreases in conferences and events of $0.6 million and software expense of $0.5 million.

These decreases were offset by a $3.1 million increase in amortization expense related to acquired intangible assets from the Hearsay acquisition.

Research and development expense was $77.2 million for the fiscal year ended January 31, 2025, compared to $72.0 million for the fiscal year ended January 31, 2024, an increase of $5.2 million, or 7%.

The increase was primarily driven by a $4.3 million increase in personnel-related costs, as well as smaller increases in depreciation expense, among others.

These increases were partially offset by a $5.1 million decrease in stock-based compensation expense, largely due to decreases in the fair value of awards granted.

General and administrative expense was $72.2 million for the fiscal year ended January 31, 2024, compared to $79.3 million for the fiscal year ended January 31, 2023, a decrease of $7.2 million or 9%.

The decrease was primarily driven by employee-related costs, as stock-based compensation expense decreased $3.0 million and personnel-related costs decreased $1.8 million, reflecting lower headcount.

In addition, professional related costs decreased $2.8 million.

These decreases were partially offset by smaller increases in bad debt expense, among others.

The increase was primarily driven by a $7.6 million increase in personnel-related costs, reflecting higher headcount.

This increase was offset by decreases in stock-based compensation expense of $1.1 million, depreciation expense of $0.6 million, as certain assets have fully depreciated, and a $0.5 million decrease in professional related costs, among others.

General and administrative expense was $105.1 million for the fiscal year ended January 31, 2025, compared to $72.2 million for the fiscal year ended January 31, 2024, an increase of $32.9 million or 46%.

The increase was primarily driven by the acquisition of Hearsay, which resulted in $8.8 million of costs being incurred related to the portion of the incentive pool payable to founders and early employees, as well as $5.5 million related to changes in the fair value of contingent consideration.

The increase was further driven by employee-related costs, as stock-based compensation expense increased $7.5 million, mainly due to PSUs granted in fiscal year 2024, and personnel-related costs increased $3.1 million, largely due to retention amounts related to Hearsay employees.

In addition, professional related costs increased $7.3 million, primarily due to professional services related to the Hearsay acquisition.

Net loss was $27.9 million and $2.6 million for the fiscal years ended January 31, 2025 and 2024, respectively.

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Non-GAAP net income (loss) is a financial measure that is not calculated in accordance with GAAP.

We define non-GAAP net income (loss) as our GAAP net income (loss) as adjusted to exclude the effects of stock-based compensation expense.

We define non-GAAP net income (loss) as our GAAP net income (loss) as adjusted to exclude the effects of stock-based compensation expense, acquisition-related costs, amortization of acquired intangibles, and the related income tax effect of these adjustments.

Acquisition-related costs include transaction and related costs, subsequent fair value movements in contingent consideration, and compensation arrangements.

We believe non-GAAP net income (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 income (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.

We also believe non-GAAP net income (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, acquisition-related costs, and amortization of acquired intangibles, which may vary for reasons unrelated to overall operating performance.

In addition, beginning in fiscal 2025, we are utilizing a projected tax rate of 25% in our computation of the non-GAAP income tax provision.

resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events.

Our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

We use non-GAAP net income (loss) in conjunction with traditional GAAP net income (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.

Adjusted EBITDA is a non-GAAP financial measure that we believe offers a useful view of overall operations used to assess the performance of core business operations and for planning purposes.

We define Adjusted EBITDA as GAAP net income (loss) before (1) interest income (expense), net, (2) provision for income taxes, (3) depreciation and amortization, (4) other income (expense), net, and (5) stock-based compensation expense.

We define Adjusted EBITDA as GAAP net income (loss) before (1) interest income (expense), net, (2) (provision for) benefit from income taxes, (3) depreciation and amortization, (4) other income (expense), net, (5) stock-based compensation expense, and (6) acquisition-related costs.

The most directly comparable GAAP financial measure to Adjusted EBITDA is GAAP net income (loss).

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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 income (loss) and Adjusted EBITDA in conjunction with GAAP net income (loss).

Recent Changes in Non-GAAP Metrics

Beginning with the three months ended July 31, 2024, we revised our definitions of Non-GAAP net income (loss) and Adjusted EBITDA to adjust for the effects of certain acquisition-related costs prompted by our recent acquisition of Hearsay.

We believe these changes provide investors with a view of continuing core operations without the effects of unusual activity specific to acquisition-related accounting.

These adjustments do not omit or adjust for the inclusion of ongoing operations of acquisitions.

We have recast our results on the same basis for the prior comparative periods presented, although the effects in those periods remain unchanged notwithstanding as no such acquisition-related activity had occurred.

The following table reconciles our GAAP net loss to non-GAAP net income (loss):

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Stock-based compensation expense 51,780 44,961

Non-GAAP net income (loss) $ 42,331 $ (2,860)

Acquisition-related costs 29,176 —

Amortization of acquired intangibles 7,097 —

Tax adjustment (1)

Non-GAAP net income $ 44,996 $ 42,331

(1) B eginning in fiscal 2025, we are utilizing a projected tax rate of 25% in our computation of the non-GAAP income tax provision.

Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events.

Our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

The following table reconciles our GAAP net loss to Adjusted EBITDA:

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Interest (income) expense, net (5,135) (6,624)

Provision for income taxes 2,292 2,080

(Benefit from) provision for income taxes (110) 2,292

Depreciation and amortization 18,531 15,805

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Stock-based compensation expense 51,780 44,961

Acquisition-related costs 29,176 —

Adjusted EBITDA $ 67,039 $ 54,565

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Revenue on a constant currency basis (Non-GAAP) $ 419,504 4 %

Free Cash Flow

We also provide free cash flow, which is a non-GAAP measure defined as net cash provided by (used in) operating activities, less cash used for purchases of capital expenditures, inclusive of capitalized software development costs.

Free cash flow margin is calculated as free cash flow divided by total revenue.

We believe this is meaningful to investors because it is a measure of liquidity that provides useful information in understanding and evaluating the strength of our liquidity and future ability to generate cash that can be used for strategic opportunities or investing in our business.

The following table provides a reconciliation of GAAP Cash flow provided by (used in) operating activities to free cash flow:

Fiscal year ended January 31,

(in thousands) 2025 2024

Net cash provided by operating activities $ 50,211 $ 46,157

Capital expenditures inclusive of capitalized software development costs (2,085) (2,728)

Free cash flow $ 48,126 $ 43,429

Operating cash flow margin 12 % 11 %

Free cash flow margin 11 % 11 %

Liquidity and Capital Resources

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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 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.

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.

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On December 22, 2022, we entered into a second amendment (“Amendment No.

2”) to the Credit Agreement, dated March 11, 2020, collectively referred to as the Credit Facility.

No significant debt issuance costs were incurred in association with the December 2022 Credit Facility.

2”) to the Credit Agreement, dated March 11, 2020, and on July 26, 2024, we entered into a third amendment ("Amendment No.

3") to the Credit Agreement, collectively referred to as the Credit Facility.

No significant debt issuance costs were incurred in association with Amendment No.2 and Amendment No.3.

Amendment No.

2 amends the Credit Facility to, among other things (i) extend the maturity date of the Credit Facility to December 22, 2025, (ii) amend the interest rate provisions to replace LIBOR with SOFR as the interest rate benchmark, and (iii) amend the recurring revenue growth rate financial covenant.

The Credit Facility 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.

2 amended the Credit Facility to, among other things (i) extend the maturity date of the Credit Facility to December 22, 2025, (ii) amend the interest rate provisions to replace LIBOR with SOFR as the interest rate benchmark, and (iii) amend the recurring revenue growth rate financial covenant.

Amendment No.

3 amended the Credit Facility to, among other things (i) amend the interest rate applicable to loans under the Credit Facility, and (ii) replace the consolidated quick ratio and recurring revenue growth rate financial covenants with consolidated total leverage ratio and minimum liquidity financial covenants.

The Credit Facility provides for a senior secured revolving loan facility of up to $50.0 million that matures on December 22, 2025, with the right subject to certain conditions to add an incremental revolving loan facility of up to $50.0 million in the aggregate.

The 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.

As amended, the revolving loans bear interest, at our election, at an annual rate based on SOFR or a base rate.

Loans based on SOFR shall bear interest at a rate between SOFR plus 2.50% and SOFR plus 3.00%, depending on our average daily usage of the revolving loan facility and subject to a SOFR floor of 1.00%.

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.

Loans based on SOFR shall bear interest at a rate between SOFR plus 1.75% and SOFR plus 2.25%, depending on our consolidated total leverage ratio and subject to a SOFR floor of 1.00%.

Loans based on the base rate shall bear interest at a rate between the base rate minus 1.25% and the base rate minus 0.75%, depending on our consolidated total leverage ratio.

We are also obligated to pay a commitment fee on the unused portion of the facility at a rate of 0.25% per annum.

The obligations under the Credit Facility 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 Facility 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 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.

The Credit Facility contains customary affirmative and negative covenants and restrictions, as well as financial covenants that require us to maintain minimum liquidity of $35.0 million at all times and a consolidated total leverage ratio of no greater than 3.00 to 1.00, tested on a quarterly basis.

As of January 31, 2025, we were in compliance with all debt covenants.

As of such date, the $50.0 million revolving loan facility had $36.6 million available and $13.4 million in letters of credit allocated as security in connection with office space.

Following the closure of SVB by the California Department of Financial Protection and Innovation on March 10, 2023, and its subsequent receivership by the Federal Deposit Insurance Corporation (“FDIC”), the FDIC announced that all of SVB’s deposits and substantially all of its assets had been transferred to a newly created, full-service FDIC-operated bridge bank, Silicon Valley Bridge Bank N.A.

On March 27, 2023, First Citizens Bank & Trust Company (“First Citizens”) acquired substantially all of the loans and certain other assets of SVBB, and assumed all customer deposits and certain other liabilities of SVBB.

As such, First Citizens assumed SVB’s obligations under the Credit Facility.

Share Repurchase Program

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In September 2023, our Board of Directors authorized an additional $50.0 million to the share repurchase program.

During the fiscal year ended January 31, 2024, 2,980,641 shares were purchased for a total cost of $22.9 million, inclusive of broker commissions.

As of January 31, 2024, a total of 16,824,920 shares have been purchased for a total cost of $100.3 million since the commencement of the program, inclusive of broker commissions, and approximately $49.7 million remains available for future purchases.

During the fiscal year ended January 31, 2025, 2,687,528 shares were purchased and as of January 31, 2025 approximately $31.9 million remains available for future purchases, exclusive of commissions paid on the repurchase of shares.

In March 2025, the Board of Directors authorized an additional $50.0 million to the share repurchase program.

In this section, we discuss our cash flows for the fiscal years ended January 31, 2025 and 2024.

For a discussion of our cash flows for the fiscal year ended January 31, 2022, please refer to Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Liquidity and Capital Resources" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023.

For a discussion of our cash flows for the fiscal year ended January 31, 2023, see Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Liquidity and Capital Resources" in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.

The following table summarizes our cash flows:

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Operating Activities

Net cash provided by operating activities of $50.2 million for the fiscal year ended January 31, 2025 reflected our net loss of $27.9 million, adjusted by non-cash charges including stock-based compensation expense of $51.8 million, depreciation and amortization expense of $18.5 million, including $7.1 million related to the amortization of acquired intangibles, as well as $8.7 million related to the amortization of operating lease right-of-use assets and $5.5 million related to adjustments to contingent consideration.

In addition, there were positive adjustments resulting from changes in accounts payable, accrued expenses and other current liabilities of $17.0 million and costs to obtain revenue contracts of $10.0 million.

These increases were offset by changes in unearned revenue of $20.5 million, operating lease liabilities of $11.1 million, and accounts receivable of $1.1 million, mainly due to timing of billing and cash collections during the period.

Net cash provided by operating activities of $46.2 million for the fiscal year ended January 31, 2024 reflected our net loss of $2.6 million, adjusted by non-cash charges including stock-based compensation expense of $45.0 million, depreciation and amortization expense of $15.8 million and amortization of operating lease right-of-use assets of $8.8 million.

In addition, there were positive adjustments resulting from changes in costs to obtain revenue contracts of $8.8 million, prepaid expenses and other current assets of $0.8 million and accounts receivable of $0.5 million, mainly due to timing of billing and cash collections during the period.

These increases were partially offset by changes in operating lease liabilities of $11.7 million, unearned revenue of $11.3 million and accounts payable, accrued expenses and other current liabilities of $10.2 million.

Net cash provided by operating activities of $17.9 million for the fiscal year ended January 31, 2023 reflected our net loss of $65.9 million, adjusted by non-cash charges including stock-based compensation expense of $63.1 million, depreciation and amortization expense of $17.6 million and amortization of operating lease right-of-use assets of $8.8 million.

In addition, there were positive adjustments resulting from changes in costs to obtain revenue contracts of $8.0 million, unearned revenue of $3.5 million and accounts payable, accrued expenses and other current liabilities of $2.7 million.

These increases were partially offset by changes in operating lease liabilities of $11.0 million, accounts receivable of $10.1 million, mainly due to timing of billing and cash collections during the period, and changes in prepaid expenses and other current assets of $2.3 million.

These increases were offset by changes in operating lease liabilities of $11.7 million, unearned revenue of $11.3 million and accounts payable, accrued expenses and other current liabilities of $10.2 million.

Investing Activities

Net cash used in investing activities of $2.7 million for the fiscal year ended January 31, 2024 reflected capital expenditures.

Net cash used in investing activities of $91.5 million for the fiscal year ended January 31, 2025 reflected cash outflows of $89.4 million related to cash paid, net of cash acquired, in the acquisition of Hearsay, as well as capital expenditures of $2.1 million.

Net cash used in investing activities of $2.7 million for the fiscal year ended January 31, 2024 reflected capital expenditures.

Financing Activities

Net cash used in financing activities of $23.3 million for the fiscal year ended January 31, 2024 was primarily related to $23.1 million in cash outflows associated with repurchases of common stock as part of our share repurchase program, as well as payments for taxes related to the net share settlement of stock-based compensation awards of $13.0 million and payments of deferred financing costs of $0.5 million.

This was partially offset by proceeds from exercise of stock options of $9.4 million and net proceeds from employee stock purchase plan withholdings of $3.9 million.

Net cash used in financing activities of $28.5 million for the fiscal year ended January 31, 2025 was primarily related to cash outflows of $17.9 million associated with repurchases of common stock as part of our share repurchase program, as well as $10.8 million associated with payments for taxes related to the net share settlement of stock-based compensation awards and $3.5 million related to deferred payments for acquisitions.

This was offset by net proceeds from employee stock purchase plan withholdings of $3.3 million.

This was partially offset by net proceeds from employee stock purchase plan withholdings of $3.2 million and proceeds from exercise of stock options of $0.7 million.

This was offset by proceeds from exercise of stock options of $9.4 million and net proceeds from employee stock purchase plan withholdings of $3.9 million.

Contractual Obligations

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We recognize interest and penalties related to uncertain tax positions within the provision for income taxes on our consolidated statement of operations and comprehensive loss.

Business Combinations

We account for business combinations using the acquisition method of accounting, which requires identifiable assets acquired and liabilities assumed in the acquiree, to be measured at their fair values, as of the acquisition date.

Any excess of the consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed is recorded as goodwill.

The determination of fair value requires management to make significant estimates, particularly with respect to intangible assets.

These estimates can include, but are not limited to:

• future expected cash flows from revenue contracts and acquired developed technologies and trademarks;

• historical and expected customer attrition rates and anticipated growth in revenue from acquired customers;

• royalty rates applied to acquired developed technology platforms and other intangible assets;

• assumptions about the period of time and intended use of acquired intangible assets;

• discount rates;

• uncertain tax positions and tax-related valuation allowances;

• fair value of assumed equity awards.

These estimates are inherently uncertain and unpredictable, and unanticipated events and circumstances may occur that may affect the accuracy or validity of such assumptions, estimates or actual results.

If the initial accounting for a business combination is not complete following the acquisition date, we report provisional amounts for the known assets, liabilities, equity interests, or items of consideration for which the accounting is incomplete at the end of the financial reporting period.

Provisional accounting is inherently subjective and judgmental.

The objective of the measurement period is to provide a reasonable period of time to obtain the information necessary to complete all aspects of business combination accounting with a high level of confidence.

During the measurement period, which may be up to one year from the acquisition date, adjustments to the reported provisional amounts may be recorded for which the accounting was incomplete, with the corresponding offset to goodwill.

Should the accounting for a business combination be incomplete by the end of a reporting period that falls within the measurement period, we report provisional amounts in our financial statements, disclosing them as provisional, and any material measurement period adjustments are identified as such.

Additional assets acquired or liabilities assumed in an acquisition that were not recognized at the acquisition date might be identified during the measurement period.

Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, no further adjustments are made.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis