Yext, Inc. 10-K

Item 7A. 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 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 January 31, 2025 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 recent foreign currency impacts due to the macroeconomic environment. 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 which includes labor costs. Nonetheless, if our costs, in particular personnel-related costs, continue 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 January 31, 2025, we had cash and cash equivalents of $123.1 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. Financial Institution Risk While we seek to minimize our exposure to third-party losses of our cash and cash equivalents, we hold our balances in a number of large financial institutions. Notwithstanding, those institutions are subject to risk of failure and our balances may be uninsured in certain cases. 58 Item 8. Consolidated Financial Statements and Supplementary Data Index to Consolidated Financial Statements PAGE Reports of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) 60 Consolidated Balance Sheets 64 Consolidated Statements of Operations and Comprehensive Loss 65 Consolidated Statements of Stockholders' Equity 66 Consolidated Statements of Cash Flows 67 Notes to Consolidated Financial Statements 69 59 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Yext, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Yext, Inc. (the Company) as of January 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 13, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 60 Revenue Recognition Description of the Matter The Company recorded consolidated revenue of $421 million for the year ended January 31, 2025, and $230 million of unearned revenue as of January 31, 2025. As described in Note 2 to the consolidated financial statements, the Company primarily earns revenue from subscriptions and associated support to the platform. The Company’s revenue contracts include contractual terms and conditions that can impact the amount allocated to each of its performance obligations and the timing of revenue recognition. Auditing the timing and measurement of the Company's revenue recognition was especially challenging due to the volume of executed contracts and the assessment of the unique terms. This involved assessing the contractual terms and conditions of both new and modified contracts to determine the contract period and identifying all performance obligations. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s internal controls over the accounting for revenue. For example, we tested controls over the Company’s processes to evaluate contractual terms and conditions and determine the timing and amount of revenue to be recognized related to the performance obligations identified as services are transferred to the customer. This included testing relevant controls over the IT systems that are important to the initiation, processing and recording of revenue transactions. We performed audit procedures that included, among others, reading a sample of revenue contracts to evaluate the contractual terms and conditions, identify performance obligations, and assess the measurement and timing of revenue recognized and unearned revenue recorded as of year-end. We tested the revenue recognized and unearned revenue as of year-end through tests of details and analytical procedures, including the recalculation of balances on a disaggregated basis. Finally, we assessed the appropriateness of the related disclosures in the consolidated financial statements. Accounting for the Hearsay Social, Inc. Acquisition Description of the Matter On August 1, 2024, the Company completed the acquisition of Hearsay Social, Inc. (“Hearsay”) for total purchase consideration of $180.4 million, including contingent consideration of $39.5 million. This transaction was accounted for as a business combination as outlined in Note 4 using the acquisition method of accounting which requires, among other things, the 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 fair value of consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed is recorded as goodwill. Auditing the Company’s accounting for its acquisition of Hearsay was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of the acquired customer relationships intangible asset, which was valued and recorded at $76.2 million, as well as the contingent consideration liability, which was valued and recorded at $39.5 million as part of the total purchase consideration of $180.4 million. The significant assumptions used in the valuation of the customer relationships intangible asset included a discount rate and certain assumptions that form the basis of the forecasted results including revenue and annual revenue growth rates, EBITDA margin, customer attrition rates, and certain contributory asset charges. The Company used the Multi-Period Excess-Earnings Method to measure the customer relationships intangible asset with the assistance of a third-party valuation specialist. The significant assumptions used in the valuation of the contingent consideration liability included a discount rate and projected Annual Recurring Revenue (“ARR”) values. The Company used the Monte Carlo model to measure the fair value of the contingent consideration liability with the assistance of a third-party valuation specialist. These significant assumptions are forward looking and could be affected by future economic and market conditions. 61 How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s accounting for the Hearsay acquisition. For example, we tested controls over management’s review of the valuation of the customer relationships intangible asset and contingent consideration liability, including management’s review of the valuation models applied and significant underlying assumptions. We also tested management’s internal controls to validate that the data used in the valuation models was complete and accurate. To test the estimated fair value of the acquired customer relationships intangible asset and contingent consideration liability, we performed audit procedures that included, among others, evaluating the Company’s valuation methodology used, evaluating the significant assumptions discussed above, and testing the completeness and accuracy of the underlying data supporting the significant assumptions and estimates used by the Company in the valuation. We involved our valuation specialists to assist in evaluating the methodology used to estimate the fair value of the acquired customer relationships intangible asset as well as the contingent consideration liability, and to test certain significant assumptions including discount rates, among others. We tested significant assumptions through a combination of procedures, as applicable for each assumption. For the acquired customer relationships intangible asset, we tested the forecasted revenue, annual revenue growth rates, and EBITDA margin by comparing the selected rates to current and forecasted industry and economic trends, the historical results of the acquired business, and other guideline companies within the same industry. For the customer attrition rates within the acquired customer relationships intangible, we tested the completeness and accuracy of the underlying data used to calculate the basis for the customer attrition rate, and compared to guideline companies within the same industry. For certain contributory asset charges within the acquired customer relationships intangible, we developed independent assumptions utilizing market data to evaluate the reasonableness of the assumption used by management. For all significant assumptions within the acquired customer relationships intangible asset, we performed sensitivity analyses to evaluate the changes in fair value of the acquired customer relationship intangible asset that would result from changes in the significant assumptions. For the ARR values within the contingent consideration liability, we performed audit procedures that included, among others, assessing the terms of the arrangement, including the conditions that must be met for the contingent consideration to become payable, testing the completeness and accuracy of the underlying data used in the assumption, and comparing the significant assumptions to the Company’s historical trends and forecasts. We also performed sensitivity analyses to evaluate the changes in fair value of the contingent consideration liability that would result from changes in the significant assumptions. /s/ Ernst & Young, LLP We have served as the Company’s auditors since 2014. New York, New York March 13, 2025 62 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Yext, Inc. Opinion on Internal Control Over Financial Reporting We have audited Yext, Inc.’s internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Yext, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 31, 2025, based on the COSO criteria. As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Hearsay Social, Inc., which is included in the January 31, 2025 consolidated financial statements of the Company as of January 31, 2025 and constituted 9% of Yext’s total assets, excluding the preliminary value of goodwill and other intangible assets as of January 31, 2025, and 8% of Yext’s total revenue for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Hearsay Social, Inc. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2025 and 2024, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended January 31, 2025, and the related notes and our report dated March 13, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. /s/ Ernst & Young, LLP New York, New York March 13, 2025 63 YEXT, INC. Consolidated Balance Sheets (In thousands, except share and per share data) January 31, 2025 January 31, 2024 Assets Current assets: Cash and cash equivalents $ 123,133 $ 210,184 Restricted cash, current 9,671 — Accounts receivable, net of allowances of $ 2,014 and $ 1,013 , respectively 112,942 108,198 Prepaid expenses and other current assets 18,094 14,849 Costs to obtain revenue contracts, current 21,961 26,680 Total current assets 285,801 359,911 Property and equipment, net 39,689 48,542 Operating lease right-of-use assets 67,452 75,989 Restricted cash, non-current 5,850 — Costs to obtain revenue contracts, non-current 11,145 16,710 Goodwill 96,782 4,478 Intangible assets, net 94,247 168 Other long term assets 9,112 3,012 Total assets $ 610,078 $ 508,810 Liabilities and stockholders’ equity Current liabilities: Accounts payable, accrued expenses and other current liabilities $ 70,022 $ 38,766 Unearned revenue, current 229,144 212,210 Operating lease liabilities, current 18,604 16,798 Contingent consideration, current 26,944 — Total current liabilities 344,714 267,774 Operating lease liabilities, non-current 76,809 89,562 Contingent consideration, non-current 18,056 — Other long term liabilities 17,306 4,300 Total liabilities 456,885 361,636 Commitments and contingencies (Note 15) Stockholders’ equity: Preferred stock, $ 0.001 par value per share; 50,000,000 shares authorized at January 31, 2025 and 2024; zero shares issued and outstanding at January 31, 2025 and 2024 — — Common stock, $ 0.001 par value per share; 500,000,000 shares authorized at January 31, 2025 and 2024, respectively; 153,017,243 and 148,197,347 shares issued at January 31, 2025 and 2024, respectively; 126,999,461 and 124,867,093 shares outstanding at January 31, 2025 and 2024, respectively 153 148 Additional paid-in capital 996,477 942,622 Accumulated other comprehensive loss ( 5,969 ) ( 4,183 ) Accumulated deficit ( 707,120 ) ( 679,172 ) Treasury stock, at cost ( 130,348 ) ( 112,241 ) Total stockholders’ equity 153,193 147,174 Total liabilities and stockholders’ equity $ 610,078 $ 508,810 See the accompanying notes to the consolidated financial statements. 64 YEXT, INC. Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) Fiscal year ended January 31, 2025 2024 2023 Revenue $ 420,957 $ 404,322 $ 400,850 Cost of revenue 96,364 87,468 103,960 Gross profit 324,593 316,854 296,890 Operating expenses: Sales and marketing 174,779 178,830 211,479 Research and development 77,201 72,040 70,903 General and administrative 105,061 72,185 79,336 Total operating expenses 357,041 323,055 361,718 Loss from operations ( 32,448 ) ( 6,201 ) ( 64,828 ) Interest income 6,102 7,094 1,684 Interest expense ( 967 ) ( 470 ) ( 589 ) Other expense, net ( 745 ) ( 761 ) ( 125 ) Loss from operations before income taxes ( 28,058 ) ( 338 ) ( 63,858 ) Benefit from (provision for) income taxes 110 ( 2,292 ) ( 2,080 ) Net loss $ ( 27,948 ) $ ( 2,630 ) $ ( 65,938 ) Net loss per share attributable to common stockholders, basic and diluted $ ( 0.22 ) $ ( 0.02 ) $ ( 0.53 ) Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted 126,850,809 124,056,949 125,250,723 Other comprehensive (loss) income: Foreign currency translation adjustment $ ( 1,792 ) $ ( 568 ) $ ( 3,421 ) Unrealized gain (loss) on marketable securities, net 6 2 ( 9 ) Total comprehensive loss $ ( 29,734 ) $ ( 3,196 ) $ ( 69,368 ) See the accompanying notes to the consolidated financial statements. 65 YEXT, INC. Consolidated Statements of Stockholders' Equity (In thousands) Accumulated Common Stock Additional Paid-In Other Comprehensive Accumulated Treasury Total Stockholders’ Shares Amount Capital Loss Deficit Stock Equity Balance, January 31, 2022 131,157 $ 137 $ 834,429 $ ( 187 ) $ ( 610,604 ) $ ( 11,905 ) $ 211,870 Exercise of stock options 259 — 711 — — — 711 Vested restricted stock units converted to common shares, net of shares withheld for employee taxes 3,967 4 ( 5,137 ) — — — ( 5,133 ) Issuance of common stock under employee stock purchase plan 796 1 3,814 — — — 3,815 Stock-based compensation — — 63,551 — — — 63,551 Repurchase of common stock ( 13,844 ) — — — — ( 77,423 ) ( 77,423 ) Other comprehensive loss — — — ( 3,430 ) — — ( 3,430 ) Net loss — — — — ( 65,938 ) — ( 65,938 ) Balance, January 31, 2023 122,335 142 897,368 ( 3,617 ) ( 676,542 ) ( 89,328 ) 128,023 Exercise of stock options 1,704 2 9,376 — — — 9,378 Vested restricted stock units converted to common shares, net of shares withheld for employee taxes 2,952 3 ( 13,017 ) — — — ( 13,014 ) Issuance of restricted stock 75 — — — — — — Issuance of common stock under employee stock purchase plan 782 1 3,671 — — — 3,672 Stock-based compensation — — 45,224 — — — 45,224 Repurchase of common stock ( 2,981 ) — — — — ( 22,913 ) ( 22,913 ) Other comprehensive loss — — — ( 566 ) — — ( 566 ) Net loss — — — — ( 2,630 ) — ( 2,630 ) Balance, January 31, 2024 124,867 148 942,622 ( 4,183 ) ( 679,172 ) ( 112,241 ) 147,174 Exercise of stock options 367 1 1,290 — — — 1,291 Vested restricted stock units converted to common shares, net of shares withheld for employee taxes 3,509 4 ( 3,189 ) — — — ( 3,185 ) Issuance of restricted stock 138 — — — — — — Issuance of common stock under employee stock purchase plan 805 — 3,689 — — — 3,689 Stock-based compensation — — 52,065 — — — 52,065 Repurchase of common stock ( 2,687 ) — — — — ( 18,107 ) ( 18,107 ) Other comprehensive loss — — — ( 1,786 ) — — ( 1,786 ) Net loss — — — — ( 27,948 ) — ( 27,948 ) Balance, January 31, 2025 126,999 $ 153 $ 996,477 $ ( 5,969 ) $ ( 707,120 ) $ ( 130,348 ) $ 153,193 See the accompanying notes to the consolidated financial statements. 66 YEXT, INC. Consolidated Statements of Cash Flows (In thousands) Fiscal year ended January 31, 2025 2024 2023 Operating activities: Net loss $ ( 27,948 ) $ ( 2,630 ) $ ( 65,938 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization expense 18,531 15,805 17,583 Bad debt expense 1,665 888 182 Stock-based compensation expense 51,780 44,961 63,078 Amortization of operating lease right-of-use assets 8,729 8,804 8,799 Adjustments to contingent consideration 5,500 — — Other, net ( 2,597 ) 540 1,195 Changes in operating assets and liabilities, net of assets acquired and liabilities assumed in a business acquisition: Accounts receivable ( 1,122 ) 518 ( 10,056 ) Prepaid expenses and other current assets ( 397 ) 755 ( 2,303 ) Costs to obtain revenue contracts 10,048 8,818 8,034 Other long term assets 351 896 1,140 Accounts payable, accrued expenses and other current liabilities 17,037 ( 10,176 ) 2,714 Unearned revenue ( 20,464 ) ( 11,252 ) 3,538 Operating lease liabilities ( 11,095 ) ( 11,687 ) ( 10,986 ) Other long term liabilities 193 ( 83 ) 873 Net cash provided by operating activities 50,211 46,157 17,853 Investing activities: Capital expenditures ( 2,085 ) ( 2,728 ) ( 6,193 ) Cash paid in acquisition, net of cash acquired ( 89,407 ) — — Net cash used in investing activities ( 91,492 ) ( 2,728 ) ( 6,193 ) Financing activities: Proceeds from exercise of stock options 1,290 9,405 714 Repurchase of common stock ( 17,907 ) ( 23,086 ) ( 77,250 ) Payments for taxes related to net share settlement of stock-based compensation awards ( 10,826 ) ( 13,015 ) ( 5,129 ) Payments of deferred financing costs ( 853 ) ( 452 ) ( 509 ) Deferred acquisition payments ( 3,542 ) — — Proceeds, net from employee stock purchase plan withholdings 3,297 3,894 3,153 Net cash used in financing activities ( 28,541 ) ( 23,254 ) ( 79,021 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1,708 ) ( 205 ) ( 3,635 ) Net (decrease) increase in cash, cash equivalents and restricted cash ( 71,530 ) 19,970 ( 70,996 ) Cash, cash equivalents and restricted cash at beginning of period 210,184 190,214 261,210 Cash, cash equivalents and restricted cash at end of period $ 138,654 $ 210,184 $ 190,214 Supplemental disclosure of cash flow data: Cash paid on interest $ 9 $ — $ 41 Cash paid on income taxes $ 3,176 $ 2,716 $ 1,046 67 Supplemental reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets: Fiscal year ended January 31, (in thousands) 2025 2024 2023 Cash and cash equivalents $ 123,133 $ 210,184 $ 190,214 Restricted cash, current and non-current 15,521 — — Total cash, cash equivalents and restricted cash $ 138,654 $ 210,184 $ 190,214 See the accompanying notes to the consolidated financial statements. 68 YEXT, INC. Notes to Consolidated Financial Statements 1. Organization and Description of Business Description of Business Yext, Inc. ("Yext" or the "Company") empowers businesses to manage their knowledge so they can deliver relevant, actionable answers to consumer questions as well as consistent, accurate and engaging experiences to customers throughout the digital ecosystem. The Company's digital presence platform (also known as the Answers Platform) lets businesses structure and organize information about their brands in the Company's knowledge graph, Yext Content (also known as the Knowledge Graph), which is then delivered across first- and third-party websites and applications through its network of over 200 service and application providers, which the Company refers to as its Publisher Network. The Company's platform powers all of the Company's key products, including Listings, Reviews, Pages, and Search, each with robust analytics capabilities for businesses to easily track performance across customer experiences. In August 2024, the Company acquired Hearsay Social, Inc., a digital client engagement platform for financial services ("Hearsay"). See Note 4 "Business Combination" for additional information. Fiscal Year The Company's fiscal year ends on January 31 st . References to fiscal 2025, for example, are to the fiscal year ended January 31, 2025. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying 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 financial reporting. The 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. There were no prior period amounts that have been reclassified to conform to the current period presentation. Business Combinations The Company accounts 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 fair value of 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 are inherently uncertain and subject to change as additional information is obtained during the measurement period, which lasts for up to one year from the acquisition date. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statement of operations and comprehensive loss. See Note 4 "Business Combination" for details. Use of Estimates The preparation of 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 including tax-related valuation allowances, the valuation and assumptions underlying stock-based compensation, the fair value of acquired assets and assumed liabilities from business combinations, contingent consideration, as well as the fair value of acquiree exchanged stock-based compensation awards, and useful lives and recoverability of intangible assets. 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 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 maker ("CODM"). The CODM of the Company is the Chief Executive Officer. The CODM evaluates the Company's financial information, resources and performance on a consolidated basis. Since the Company operates as one operating segment, all required financial segment information can be found in the consolidated financial statements. 69 Revenue Recognition The Company derives its revenue primarily from its subscriptions and associated support to the Company's platform. The Company's subscriptions do not provide customers with the right to take possession of the software supporting the applications and, as a result, are accounted for as service contracts. The Company accounts for revenue in accordance with ASC Topic 606, "Revenue from Contracts with Customers". The Company recognizes revenue upon transfer of control of services to its customers in an amount that reflects the consideration it expects to receive in exchange for those services. The recognition of revenue is determined through application of the following five-step model: • Identification of the contract(s) with customers; • Identification of the performance obligation(s) in the contract; • Determination of the transaction price; • Allocation of the transaction price to the performance obligation(s) in the contract; and • Recognition of revenue when or as the performance obligation(s) are satisfied The Company identifies the performance obligations in a contract with a customer and determines whether they are distinct or distinct within the context of the contract. When there is more than one distinct performance obligation in a contract, the Company allocates the transaction price to the performance obligations on a relative standalone selling price basis. The Company estimates the amount of consideration expected to be received in exchange for transferring services if the consideration promised in a contract includes a variable amount. Revenue is generally recognized ratably over the contract term beginning on the commencement date of each contract, which is the date the Company's platform is made available to customers. Contracts are typically one year in length, but may be up to three years or longer in length. At the beginning of each subscription term the Company invoices its customers, typically in annual installments but also monthly, quarterly, and semi-annually. Amounts that have been invoiced for non-cancelable contracts are recorded in accounts receivable and in unearned revenue or revenue. The Company reports revenue net of sales tax and other taxes collected from customers to be remitted to government authorities. Costs Capitalized to Obtain Revenue Contracts The Company capitalizes costs of obtaining revenue contracts that are incremental and recoverable. Incremental costs primarily include sales commissions for new and renewal revenue contracts, certain related incentives, and associated payroll tax and fringe benefit costs. Capitalized amounts are recoverable through future revenue streams under all customer contracts. Costs capitalized to obtain new revenue contracts are amortized on a straight-line basis over three years , which reflects the average benefit period, and may be longer than the initial contract period. The Company determined the average benefit period having considered both qualitative and quantitative factors, including the estimated life of capitalized software development costs resulting from additional functionality to the Company's platform and estimated customer life, among other such factors. The Company amortizes costs capitalized for contract renewals over the renewal term, reflecting the average benefit period for such renewals, which is typically one year . Amortization of costs capitalized to obtain revenue contracts is included in sales and marketing expense in the accompanying consolidated statements of operations and comprehensive loss. The Company periodically evaluates whether there have been any changes in its business, market conditions, or other events which would indicate that its amortization period should be changed, or if there are potential indicators of impairment. During the fiscal years ended January 31, 2025 and 2024, the Company capitalized $ 20.9 million and $ 27.7 million of costs to obtain revenue contracts respectively, and amortized $ 31.2 million, $ 36.4 million and $ 38.6 million to sales and marketing expense as of January 31, 2025, 2024, and 2023, respectively. Costs capitalized to obtain revenue contracts on the Company's consolidated balance sheet totaled $ 33.1 million and $ 43.4 million at January 31, 2025 and 2024, respectively. There were no impairments of costs capitalized to obtain revenue contracts for the fiscal years ended January 31, 2025, 2024 and 2023, respectively. Cost of Revenue Cost of revenue is generally expensed as incurred, including personnel-related costs, costs associated with the Company’s Publisher Network application providers, and data center costs. Capitalized software development costs incurred in connection with additional functionality to the Company's platform are recognized in cost of revenue as depreciation expense in accordance with the “capitalized software development costs” section of this Note. Cost of revenue also includes amortization expense, which includes amounts related to intangible assets arising from acquisitions, as well as lease expenses, software expense, and depreciation expense, each of which are allocated based on employee headcount. Stock-Based Compensation Stock-based compensation for all employee stock-based awards, including restricted stock units, restricted stock, performance-based restricted stock units, and options to purchase common stock, is measured at fair value on the date of grant and recognized over the service period. 70 The fair value of restricted stock units and restricted stock are estimated on the date of grant based on the fair value of the Company’s common stock. The fair value of performance-based restricted stock units are estimated on the date of grant using a Monte Carlo simulation model. The fair value of employee stock options is estimated on the date of grant using a Black-Scholes option-pricing model. Stock-based compensation expense is generally recognized over the requisite service periods of awards, which is typically one to four years for restricted stock units, restricted stock and performance-based restricted stock units, and four years for options. The estimated forfeiture rate applied is based on historical forfeiture rates. The estimated number of stock-based awards that will ultimately vest requires judgment, and to the extent actual results, or updated estimates, differ from the Company’s current estimates, such amounts will be recorded as a cumulative adjustment in the period actual results are realized or estimates are revised. Stock-based compensation expense associated with the Company's Employee Stock Purchase Plan (“ESPP”) is measured at fair-value using a Black-Scholes option-pricing model at commencement of each offering period and recognized over that offering period. The Company measures stock-based compensation associated with stock-based awards issued to non-employees at the grant date, based on the estimated fair value of the award, and recognizes expense on a straight-line basis over the requisite service period. The Company does not apply a forfeiture rate assumption to value such awards, given the nature of the services provided. Liability classified awards are remeasured at fair value at each reporting date until the award is settled. Advertising and Other Promotional Costs Advertising and other promotional costs are expensed as incurred. Advertising expenses were $ 3.7 million, $ 3.9 million and $ 3.5 million for the fiscal years ended January 31, 2025, 2024 and 2023, respectively and are included within sales and marketing expense in the consolidated statement of operations and comprehensive loss. Research and Development Research and development costs are generally expensed as incurred, including personnel-related costs. Research and development expenses also include data centers costs associated with pre-production costs for testing and quality assurance, as well as lease expenses and software expense, each of which are allocated based on employee headcount. Research and development costs exclude capitalized software development costs. Capitalized Software Development Costs The Company capitalizes certain software development costs included as software in progress or computer software within property and equipment, net. These costs are incurred in connection with additional functionality to its platform, as well as internal-use projects during the application development stage and include elements of stock-based compensation. Computer software is recognized on a straight-line basis over an estimated useful life of 2 to 3 years. Capitalized software development costs incurred in connection with additional functionality to the Company's platform are recognized as depreciation expense in cost of revenue within the consolidated statement of operations and comprehensive loss. Capitalized software development costs incurred in internal-use projects are recognized as depreciation expense and are allocated based on employee headcount. Capitalized software development costs, net were $ 2.1 million as of both January 31, 2025 and 2024, respectively, and primarily related to costs incurred in connection with additional functionality to its platform. Depreciation expense associated with capitalized software development costs was $ 1.8 million, $ 3.2 million and $ 4.9 million during the fiscal years ended January 31, 2025, 2024 and 2023, respectively. Software costs that meet the cloud computing arrangements criteria are capitalized in accordance with ASC 350 “Intangibles—Goodwill and Other” and are recognized on a straight-line basis over the term of the arrangement, plus reasonably certain renewals. Capitalized costs included in prepaid expenses and other current assets were $ 0.3 million and $ 0.5 million as of January 31, 2025 and 2024 respectively, and $ 0.5 million, $ 1.0 million, and $ 2.5 million were amortized during the fiscal years ended January 31, 2025, 2024, and 2023, respectively. Software costs that do not meet the capitalization criteria, including costs incurred in the maintenance and minor upgrade and enhancement of software without additional functionality, are expensed as incurred. The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Income Taxes The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes,” under which deferred income taxes are provided for temporary differences between the financial reporting and tax basis of the Company’s assets and liabilities. The Company classifies all deferred tax assets and liabilities as non-current on the consolidated balance sheet. The effect of a change in tax rates on deferred tax assets and liabilities is recognized within the provision for income taxes on the consolidated statement of operations and comprehensive loss in the period that includes the enactment date. The Company reduces deferred tax assets, if necessary, by a valuation allowance if it is more likely than not that the Company will not realize some or all of the deferred tax assets. In making such a determination, the Company considers all available positive and negative evidence, including results of recent operations, future reversals of existing taxable temporary differences, projected 71 future taxable income and tax-planning strategies. See Note 13 "Income Taxes" to the Company's consolidated financial statements for additional information on the composition of these valuation allowances. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit which is greater than 50 percent likely to be realized upon settlement with the taxing authority. The Company recognizes interest and penalties related to uncertain tax positions within the provision for income taxes on the consolidated statement of operations and comprehensive loss. Net Loss Per Share 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, restricted stock units and performance-based 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 the common equivalent shares for the period, including any dilutive effect from such shares. See Note 16 "Net Loss Per Share Attributable to Common Stockholders" for further discussion. Foreign Currency The functional currency of the Company’s non-U.S. subsidiaries is generally the local currency. The Company translates the financial statements of its non-U.S. subsidiaries to U.S. dollars using month-end exchange rates for assets and liabilities, and average exchange rates for revenue, costs and expenses. The Company records translation gains and losses in accumulated other comprehensive loss as a component of stockholders’ equity. Foreign currency transaction gains and losses are included within other expense, net in the consolidated statements of operations and comprehensive loss. 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 January 31, 2025 and 2024, 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 total revenue for the fiscal years ended January 31, 2025, 2024 and 2023, respectively. Cash and Cash Equivalents Cash consists of cash on deposit with banks that is stated at cost, which approximates fair value. The Company considers all highly liquid investments purchased with original maturities of less than three months from the date of purchase to be cash equivalents. Restricted cash as of January 31, 2025, consists of $ 15.5 million of funds held in escrow in connection with the acquisition of Hearsay for certain post-closing indemnification obligations. Marketable Securities The Company's investments in marketable securities may consist of debt securities, including U.S. treasury securities, corporate bonds, and commercial paper. The Company classifies marketable securities as available-for-sale at the time of purchase and reevaluates such classification as of each balance sheet date. The Company considers all of its investments in marketable securities, irrespective of the maturity date, as available for use in current operations, and therefore classifies these securities within current assets on the consolidated balance sheets. All marketable securities are carried at estimated fair value. Credit losses related to marketable securities are recorded, net in the consolidated statements of operations and comprehensive loss through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. As of January 31, 2025, 2024, and 2023 no credit losses related to marketable securities were recorded by the Company. Any remaining unrealized gains or losses for marketable securities are included in accumulated other comprehensive income (loss), as a component of stockholders’ equity. 72 Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. The Company estimates its allowance for doubtful accounts based on historical loss patterns, the number of days that billings are past due, current market conditions, and reasonable and supportable forecasts of future economic conditions, in accordance with ASC 326 "Financial Instruments-Credit Losses." Accounts receivable are written off when deemed uncollectible and collection of the receivable is no longer being actively pursued. The following table summarizes the allowance for doubtful accounts activity: (in thousands) Fair Value Allowance for doubtful accounts as of January 31, 2023 $ 868 Additions 888 Deductions - write offs ( 743 ) Allowance for doubtful accounts as of January 31, 2024 1,013 Additions 1,665 Additions related to Hearsay beginning balance at August 1, 2024 94 Deductions - write offs ( 758 ) Allowance for doubtful accounts as of January 31, 2025 $ 2,014 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. Furniture and fixtures have an estimated useful life of five years . Office equipment has an estimated useful life of three years . Computer software, which includes capitalized software development costs, has an estimated useful life of two to three years . Leasehold improvements and assets held under operating leases are depreciated over the shorter of the term of the lease or their useful life. Upon retirement or sale of assets, the cost and related accumulated depreciation or amortization are removed from the consolidated balance sheet and the resulting gain or loss is reflected in the consolidated statement of operations and comprehensive loss. Repairs and maintenance costs are expensed as incurred. Leases The Company accounts for leases in accordance with ASC Topic 842, "Leases." Lease expense is recognized as a single lease cost on a straight-line basis over the lease term. The lease term consists of non-cancelable periods, and may include options to extend or terminate the lease term, when it is reasonably certain such options will be exercised. The Company enters into contracts in the normal course of business and assesses whether any such contracts contain a lease. The Company determines if an arrangement is a lease at inception if it conveys the right to control the identified asset for a period of time in exchange for consideration. The Company classifies leases as operating or financing in nature, and records the associated lease liability and right-of-use asset on its balance sheet. The lease liability represents the present value of future lease payments, net of lease incentives, discounted using an incremental borrowing rate, which is a management estimate based on the information available at the commencement date of a lease arrangement. With respect to operating lease arrangements, the Company accounts for lease components, and non-lease components that are fixed, as a single lease component. Non-lease components that are variable are expensed as incurred in the statement of operations and comprehensive loss. The Company recognizes costs associated with lease arrangements having an initial term of 12 months or less ("short-term leases") on a straight-line basis over the lease term; such short-term leases are not recorded on the balance sheet. Goodwill and Intangible Assets Goodwill represents the excess of cost over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. Goodwill is not amortized but is subject to periodic testing for impairment in accordance with ASC Topic 350, “Intangibles-Goodwill and Other.” The Company’s goodwill is evaluated at the entity level as it is determined there is one reporting unit. The Company performs its annual impairment test on November 1 st of each year, 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 considers the following potential indicators of impairment: significant underperformance relative to historical or projected future operating results, significant changes in the Company’s use of acquired assets or the strategy of the Company’s overall business, significant negative industry or economic trends and a significant decline in the value of the Company’s enterprise value for a sustained period. A qualitative assessment is performed to determine whether it is more likely than not that the fair value of its reporting unit is less than its carrying amount. A quantitative assessment is performed if the qualitative assessment results in a more-likely-than-not determination or if a qualitative assessment is not performed. The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent that the reporting unit’s carrying value exceeds its fair value. 73 Intangible assets are amortized over their estimated useful lives. The Company assesses the impairment of long-lived intangible assets whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company has not recorded impairment charges on intangible assets for the periods presented in these consolidated financial statements. Deferred Financing Costs Financing costs incurred with securing a revolving line of credit are deferred and amortized to interest expense over the term of the agreement. Financing costs associated with revolving credit arrangements are deferred, regardless of whether a balance is outstanding. The Company includes deferred financing costs in prepaid and other current assets or other long term assets on the consolidated balance sheet. Legal and Other Contingencies From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, breach of contract claims and other asserted and unasserted claims. The Company investigates these claims as they arise and accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. Recent Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The Company adopted this accounting standard on January 31, 2025. While the adoption has no impact on our financial statements, it has resulted in incremental disclosures within the footnotes to the consolidated financial statements. See Note 17 "Segment Information" for additional information. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning in fiscal 2026, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2023-09. In November 2024, the FASB issued 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. The updated standard is effective for the Company's annual periods beginning in fiscal 2028 and interim periods beginning in the first quarter of fiscal 2029. Early adoption is permitted. ASU 2024-03 is required to be applied prospectively, with retrospective application permitted. The Company is currently evaluating the impact of adopting ASU 2024-03. 3. Revenue 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: Fiscal year ended January 31, (in thousands) 2025 2024 2023 North America $ 336,323 $ 318,502 $ 322,318 International 84,634 85,820 78,532 Total revenue $ 420,957 $ 404,322 $ 400,850 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 %, 79 %, and 80 % for the fiscal years ended January 31, 2025, 2024 and 2023, respectively. Revenue attributable to the United Kingdom, which serves as the Company's main contracting entity for Europe, represented 19 %, 20 % and 18 % of total revenue for the fiscal years ended January 31, 2025, 2024 and 2023, respectively. No other individual country represented more than 10% of total revenue during the fiscal years ended January 31, 2025, 2024 and 2023. Significant Judgments Significant judgments and estimates may be required to determine the appropriate application of accounting related to revenue, including whether performance obligations are distinct and assessments regarding the transaction price. 74 Performance Obligations The Company has identified that it has two distinct performance obligations. The Company predominantly recognizes revenue through its performance obligation of a subscription and associated support to the Company's platform. The performance obligation is distinct because a customer's use of the Company's platform is fully functional upon access, does not require any additional development, modification or customization, and is often sold separately. In certain instances, the Company enters into a contract with a customer that includes a promise to provide certain technical or customized professional services, in addition to a promise to provide its subscription and associated support. The Company's professional services performance obligation is distinct as it does not significantly change or enhance the functionality of the Company's platform. In those instances when a contract includes more than one performance obligation, the Company must allocate the transaction price to the performance obligations on a relative standalone selling price basis ("SSP"). SSP represents the price at which a company would sell a promised product or service separately to a customer. The Company determines the SSP based on a series of complex factors. The Company's selling prices associated with its subscription and associated support are considered highly variable based on discounting practices, customer geography, customer size, and other such factors. In contrast, the Company's selling prices associated with its professional services are more observable, predictable and consistent. Accordingly, the Company uses the residual method, under which the total transaction price and observable SSP of the professional services performance obligation is used to arrive at the estimated SSP of the subscription and associated support performance obligation. The Company's revenue is predominantly related to its subscription and associated support to the Company's platform. Professional services revenue accounted for approximately 7 %, 8 % and 9 % of the Company's total revenue for the fiscal years ended January 31, 2025, 2024 and 2023, respectively. Contract Assets The Company records a contract asset when revenue is recognized prior to being billed. Contract assets were $ 1.7 million as of January 31, 2025 and not significant as January 31, 2024. Contract assets are included in prepaid expenses and other current assets on the consolidated balance sheet. 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 January 31, 2025 and 2024, unearned revenue, current was $ 229.1 million and $ 212.2 million, while unearned revenue, non-current, which is included within other long term liabilities on the Company's consolidated balance sheet was $ 0.6 million and $ 0.7 million, respectively. Unearned revenue represents amounts billed, or payments received, in advance of revenue recognition for which the Company has an unconditional obligation to transfer goods or services associated with a non-cancelable contract. Unearned revenue is subsequently recognized as revenue when transfer of control to a customer has occurred. The unearned revenue balance is influenced by several factors, including seasonality, the compounding effects of renewals, and invoice duration, timing and size. The portion of unearned revenue expected to be recognized during the succeeding twelve-month period is classified as unearned revenue, current, and the remaining portion is classified within other long term liabilities in the Company’s consolidated balance sheet. Revenue recognized of $ 208.7 million during the fiscal year ended January 31, 2025 was included in unearned revenue, current as of January 31, 2024. 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. Customer deposits was $ 0.2 million as of both, January 31, 2025 and 2024, and was included in accounts payable, accrued expenses and other current liabilities on the Company's consolidated balance sheet, respectively. 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 January 31, 2025, the Company had $ 490.1 million of remaining performance obligations, of which $ 441.7 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, 2024, the Company had $ 465.1 million of remaining performance obligations. 75 4. Business Combination Hearsay Acquisition On August 1, 2024 (the "Acquisition Date"), Yext completed its acquisition of Hearsay pursuant to an Agreement and Plan of Merger dated June 10, 2024 (such acquisition, the "Acquisition"). At the effective time of the Acquisition, each outstanding share of Hearsay stock was canceled and converted to a right to receive cash consideration, and Hearsay became a wholly owned subsidiary of Yext. The Acquisition is intended to produce an end-to-end digital presence platform, combining Yext’s digital presence management capabilities with Hearsay's compliant engagement solutions across social media, websites, text, and voice. The Acquisition Date fair value of consideration transferred for Hearsay consisted of the following: (in thousands) Cash consideration and liabilities incurred $ 132,462 Contingent consideration 39,500 Fair value of outstanding employee awards assumed 7,825 Other transaction related payments (1) 640 Total consideration transferred $ 180,427 (1) Inclusive of post-closing adjustments of less than $ 0.1 million. Cash consideration and liabilities incurred of $ 132.5 million includes the base purchase price of $ 125.0 million and customary adjustments set forth in the merger agreement. The cash consideration includes $ 17.2 million of payments held in escrow as partial security for certain indemnification obligations of the former holders of Hearsay equity. Amounts held in escrow were reflected on the Company's consolidated balance sheet at the Acquisition Date within restricted cash (current and non-current) as the funds are owned by the Company until settlement. In connection with the amounts held in escrow, the Company recognized a corresponding liability on its consolidated balance sheet at the Acquisition Date at its present value of $ 16.6 million to reflect the amounts payable to former Hearsay equity holders following the resolution of contingencies surrounding the amounts held in escrow. The liability will be accreted to its contractual value over the estimated escrow period with changes in the liability being recorded within interest expense on the Company's consolidated statements of operations and comprehensive loss. For the fiscal year ended January 31, 2025, interest expense was immaterial , and $ 2.0 million was released from amounts held in escrow following the completion of the post-closing process. As of January 31, 2025, $ 9.7 million of the remaining escrow is estimated to be released during the fiscal year ended January 31, 2026, with the remaining amount thereafter. The preliminary purchase price also includes $ 39.5 million of contingent consideration related to an earnout arrangement whereby the Company may be required to pay up to $ 75.0 million to the former holders of Hearsay's outstanding equity interests, subject to the achievement of certain Annual Recurring Revenue ("ARR") milestones over a two-year period which will end in September 2026. The portion of the earnout arrangement included within contingent consideration excludes amounts attributable to employees of Hearsay that held unvested awards as of the Acquisition Date, for which earnout payments are subjected to future service. Accordingly, these amounts represent compensation expense in the post-Acquisition period. Payment of the earnout can be settled in cash or shares at the Company's election. The Company preliminarily estimated the fair value of the contingent consideration as of the Acquisition Date. This estimate incorporates projected ARR values inclusive of revenue synergies and growth rates, as well as other key inputs. The key inputs as of the Acquisition Date are outlined below: Volatility 15.0 % Revenue beta 0.35 Expected timing of payment FY 2026 - FY 2027 Discount rate 5.90 % - 6.20 % See Note 6 "Fair Value of Financial Instruments" for additional details on the fair value of contingent consideration. The Company also issued approximately 2.1 million replacement equity awards with a fair value of $ 11.8 million, of which (i) $ 7.8 million was allocated to consideration transferred for pre-Acquisition services, inclusive of employer related payroll taxes, and (ii) $ 4.2 million was allocated to the post-Acquisition period and expensed over the remaining requisite service period associated with the awards. The value attributed to consideration transferred was based on the fair value of Hearsay options prior to the exchange. Approximately 1.5 million equity awards that were granted also vested on the Acquisition Date, and $ 0.6 million was recognized in the post-Acquisition period immediately to reflect the excess of the fair value of the replacement awards over the fair value of the Hearsay options. These awards were subsequently net settled, which represents an event that is separate from the Acquisition. In addition, the Company recognized other transaction related payments of $ 0.6 million in the estimated consideration which are comprised primarily of post-closing adjustments, including estimated working capital. 76 The Company is also required to make additional payments related to a $ 20.0 million incentive pool that can be settled in cash or shares at the Company's election, shortly after the first anniversary of the Acquisition Date. Approximately $ 8.8 million of this pool is to be paid to Hearsay founders and early employees, and is not contingent on future service being provided. This amount was recognized immediately in the post-Acquisition period in operating expenses, within general and administrative expenses on the Company's consolidated statements of operations and comprehensive loss. The remaining amount of the incentive pool is allocated to employees generally subject to continued employment of one-year from the Acquisition Date. In addition, a transaction bonus of $ 1.5 million is payable to individuals determined by Hearsay and deemed to be compensation expense attributable to the post-Acquisition period. Amounts attributable to the remaining incentive pool and transaction bonus will be expensed in the post-Acquisition period over the requisite service period. Acquisition-related costs totaled $ 11.2 million for the fiscal year ended January 31, 2025. These costs were expensed as incurred and include $ 8.8 million related to the portion of the incentive pool attributable to Hearsay founders and early employees, as well as professional fees. Acquisition-related costs are presented within general and administrative expense in the Company's consolidated statement of operations and comprehensive loss. The Company's financial results for the fiscal year ended January 31, 2025 reflect inclusion of the business operations of Hearsay from the Acquisition Date, which contributed $ 33.2 million of revenue. Due to the continued integration of the combined business, it was impractical to determine the impact on earnings. The following table summarizes the preliminary purchase price allocation of the fair values of the assets acquired and liabilities assumed at the Acquisition Date: (amounts in thousands) Assets acquired: Cash and cash equivalents $ 26,362 Accounts receivable, net 5,619 Prepaid expenses and other current assets 2,454 Property and equipment, net 399 Operating lease right-of-use assets 414 Other long term assets (1) 5,942 Liabilities assumed: Accounts payable, accrued expenses, and other current liabilities ( 5,127 ) Operating lease liabilities, current ( 74 ) Unearned revenue, current ( 37,672 ) Operating lease liabilities, non-current ( 340 ) Other long term liabilities (1)(2) ( 11,179 ) Identifiable intangible assets acquired 101,200 Net assets acquired $ 87,998 Goodwill (3) $ 92,429 Total consideration $ 180,427 (1) Other long term assets includes a $ 5.9 million indemnification asset, with the underlying indemnified liability of $ 6.2 million recorded within other long term liabilities. (2) Included within other long term liabilities is a deferred tax liability of approximately $ 3.4 million. (3) Inclusive of post-closing adjustments of less than $ 0.1 million. The Company determined the fair value of assets acquired and liabilities assumed by using available market information and various valuation methods that require judgement related to estimates. The preliminary fair value estimates and assumptions regarding certain tangible assets acquired and liabilities assumed, and the valuation of intangible assets acquired, income taxes and contingent consideration are subject to change as additional information is obtained during the measurement period. During the fiscal year ended January 31, 2025, the Company refined its estimates pertaining to the valuation of intangibles which resulted in an increase of $ 9.9 million in intangible assets and $ 1.7 million in deferred tax liabilities. Additionally, the Company increased the useful life of the customer relationships asset from 12 years to 13 years. See Note 7 "Goodwill and Intangible Assets" for additional information. 77 Pursuant to the terms of the merger agreement, the Company was indemnified by the sellers for the pre-Acquisition contingent liability assumed in the Acquisition associated with the Canadian Good and Services Tax (“GST”) and Harmonized sales tax (“HST”) related to certain historical foreign sales transactions. The indemnification of the indirect tax liability is capped at $ 5.9 million and an escrow fund was established in the same amount. At the Acquisition Date, the associated indirect tax liability was recorded at the estimated fair value of $ 6.2 million within other long term liabilities, and the Company recorded an indemnification asset up to the amount of the escrow fund balance of $ 5.9 million. In October 2024, initial filings to settle this matter with the Canada Revenue Agency were initiated and an initial payment of $ 1.9 million was made. As of January 31, 2025, the remaining indirect tax liability was $ 4.5 million. Goodwill represents the excess of the purchase consideration over the fair value of the underlying net identifiable assets and is attributable primarily to expected synergies and the assembled workforce of Hearsay. Goodwill is not deductible for income tax purposes. Intangible Assets The following table sets forth the preliminary amounts, allocated to the intangible assets identified and their estimated useful lives as of the Acquisition Date: Identifiable Intangible Assets Acquired Approximate Fair Value (In thousands) Estimated Useful Life (In years) Classification of Amortization Customer relationships $ 76,200 13 Sales and marketing Technology 24,200 3 Cost of revenue Trademark 800 3 Sales and marketing Total $ 101,200 The fair values of the identifiable intangible assets are based on management’s estimates as of the Acquisition Date. The fair value of the intangible assets was determined using the excess earnings method and the relief from royalty method, under the income approach. The Company applied judgment in estimating the fair value of customer relationships using the excess earnings method, which involved the use of significant assumptions with respect to revenue, EBITDA, attrition rate, research and development addback, technology royalty rate, and discount rate. The fair value of the developed technology and trademark was estimated using the relief from royalty method, which incorporates assumptions including royalty rates, annual obsolescence, tax rates, and discount rates. Pro Forma Results The unaudited pro forma financial information presented below was derived from historical financial records of Yext and Hearsay and presents the operating results for the periods presented as if the Acquisition occurred on February 1, 2023. The pro forma results include adjustments to record additional compensation expense, adjust commission expense, and adjust for the impact of purchase accounting adjustments including amortization and depreciation expense, and the related tax effects. Accordingly, the following unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Acquisition had occurred at the beginning of fiscal year 2024, nor are they indicative of future results of operations: (in thousands) Fiscal Year Ended January 31, 2025 2024 Revenue $ 452,129 $ 465,231 Net loss $ ( 25,225 ) $ ( 51,878 ) 78 5. Investments in Marketable Securities The following tables summarize the Company's investments in marketable securities: January 31, 2025 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Money market funds $ 36,371 $ — $ — $ 36,371 Total marketable securities $ 36,371 $ — $ — $ 36,371 January 31, 2024 (in thousands) Amortized Cost Unrealized Gains Unrealized Losses Fair Value Money market funds $ 63,966 $ — $ — $ 63,966 U.S. treasury securities 82,642 — ( 7 ) 82,635 Total marketable securities $ 146,608 $ — $ ( 7 ) $ 146,601 As of January 31, 2025 and 2024, the Company's marketable securities have a maturity of 90 days or less and are classified as cash and cash equivalents. During the fiscal years ended January 31, 2025, 2024 and 2023, the Company had no material reclassification adjustments from accumulated other comprehensive loss to net loss. The Company classifies interest income on investments in marketable securities, amortization of premiums and discounts, and realized gains and losses on securities available for sale within interest income in the consolidated statements of operations and comprehensive loss. The Company regularly reviews its debt securities and monitors the surrounding economic conditions to assess the risk of expected credit losses. As of January 31, 2025 and 2024, the unrealized losses and the related risk of expected credit losses were not significant. 6. 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. 79 The Company's assets and liabilities measured at fair value on a recurring basis, by level, within the fair value hierarchy are as follows: January 31, 2025 (in thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 36,371 $ — $ — $ 36,371 Total assets $ 36,371 $ — $ — $ 36,371 Liabilities: Contingent consideration (1) $ — $ — $ 45,000 $ 45,000 Total liabilities $ — $ — $ 45,000 $ 45,000 January 31, 2024 (in thousands) Level 1 Level 2 Level 3 Total Assets: Money market funds $ 63,966 $ — $ — $ 63,966 U.S. treasury securities — 82,635 — 82,635 Total assets $ 63,966 $ 82,635 $ — $ 146,601 (1) As of January 31, 2025, contingent consideration includes $ 26.9 million classified as current and $ 18.1 million classified as non-current. The Company’s cash equivalents and marketable securities for the periods presented were valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs and were classified as Level 1 or Level 2, accordingly. As of January 31, 2025, the Company measured its contingent consideration associated with the Acquisition, on a recurring basis using significant unobservable inputs, classified as Level 3. Contingent Consideration The Company records contingent consideration resulting from a business combination at its fair value on the acquisition date. The Company generally determines the fair value of contingent consideration using the Real Options Method that employs a Monte Carlo simulation model. Each reporting period thereafter, these obligations are revalued and changes in their fair values are recorded within general and administrative expenses within the consolidated statements of operations and comprehensive loss. Changes in the fair value of the contingent consideration can result from changes in assumed discount periods and rates, and from changes pertaining to the estimated or actual achievement of the defined milestones. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value and corresponding changes in fair value of the contingent consideration the Company records in any given period. In connection with the Acquisition, the estimated fair value of the contingent consideration incorporates projected ARR values inclusive of revenue synergies and growth rates, as well as other key inputs. The key inputs as of January 31, 2025 are outlined below: Volatility 14.5 % Revenue beta 0.26 Expected timing of payment FY 2026 - FY 2027 Discount rate 6.76 %- 6.84 % A rollforward of the fair value of the contingent consideration liability for the fiscal year ended January 31, 2025 is as follows: (in thousands) Balance as of August 1, 2024 $ 39,500 Change in fair value 5,500 Balance as of January 31, 2025 $ 45,000 80 7. Goodwill and Intangible Assets Goodwill 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 1 st , 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. On August 1, 2024, the Acquisition was completed, resulting in the following changes in the carrying amount of goodwill for the fiscal year ended January 31, 2025, inclusive of measurement period adjustments. See Note 4 "Business Combination" for additional information. The following table presents a reconciliation of the beginning and ending balances of goodwill: Balance as of January 31, 2024 $ 4,478 Goodwill acquired - Hearsay Social, Inc 100,530 Measurement period adjustments ( 8,101 ) Effect of foreign currency translation on Goodwill acquired ( 125 ) Balance as of January 31, 2025 $ 96,782 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 reporting periods ended January 31, 2025, and 2024. However, if certain events occur or circumstances change, it may be necessary to record impairment charges in the future. Intangible Assets The Company’s intangible assets with definite lives are amortized on a straight-line basis over their estimated useful lives, which range from 3 to 15 years. Intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company has no indefinite-lived intangible assets. The Company determined that no events occurred or circumstances changed during the reporting periods ended January 31, 2025 and 2024 that would indicate that its intangible assets with finite lives may not be recoverable. However, if certain events occur or circumstances change, it may be necessary to record impairment charges in the future. Amortization expense was $ 7.1 million for the fiscal year ended January 31, 2025, and less than $ 0.1 million for each the fiscal years ended January 31, 2024 and 2023, respectively. 81 The gross carrying amount and accumulated amortization of intangible assets other than goodwill are as follows: As of January 31, 2025 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Useful Life Domains $ 365 $ ( 221 ) $ 144 6.0 Customer relationships (1) 76,200 ( 2,931 ) 73,269 12.5 Technology (1) 24,200 ( 4,033 ) 20,167 2.5 Trademarks (1) 800 ( 133 ) 667 2.5 Total as of January 31, 2025 $ 101,565 $ ( 7,318 ) $ 94,247 10.1 As of January 31, 2024 (in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Useful Life Domains $ 365 $ ( 197 ) $ 168 7.0 Total as of January 31, 2024 $ 365 $ ( 197 ) $ 168 (1 ) Recognized in connection with the Acquisition. The estimated future aggregate amortization expense as of January 31, 2025 is as follows (in thousands): Fiscal Year Ending January 31, 2026 $ 14,219 2027 14,219 2028 10,052 2029 5,885 2030 5,884 2031 and thereafter 43,988 Total $ 94,247 8. 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) January 31, 2025 January 31, 2024 Computer software $ 24,086 $ 22,500 Office equipment 23,529 22,674 Furniture and fixtures 7,894 7,930 Leasehold improvements 59,944 59,927 Construction in progress 27 249 Software in progress 548 370 Total property and equipment, gross 116,028 113,650 Less: accumulated depreciation ( 76,339 ) ( 65,108 ) Total property and equipment, net $ 39,689 $ 48,542 As of January 31, 2025 and 2024, the Company's property and equipment, net attributable to the United States was 91 % and 90 %, respectively. No other individual country represented more than 10% of the total property and equipment, net as of those periods. Depreciation expense was $ 11.4 million, $ 15.8 million and $ 17.6 million for the fiscal years ended January 31, 2025, 2024 and 2023, respectively. 82 9. Accounts Payable, Accrued Expenses and Other Current Liabilities Accounts payable, accrued expenses and other current liabilities consisted of the following: (in thousands) January 31, 2025 January 31, 2024 Accounts payable $ 4,771 $ 7,430 Accrued employee compensation (1) 29,153 15,961 Accrued Publisher Network fees 4,051 1,839 Accrued professional services and associated costs 3,131 2,307 Accrued employee stock purchase plan withholdings liability 1,565 1,958 Other current liabilities (2)(3) 27,351 9,271 Total accounts payable, accrued expenses and other current liabilities $ 70,022 $ 38,766 (1) As of January 31, 2025, accrued employee compensation included $ 8.6 million related to the portion of the incentive pool and other retention arrangements where continuing service is required arising from the Acquisition. (2) As of January 31, 2025, other current liabilities included $ 9.7 million payable to Hearsay owners in connection with escrow funds held by Yext related to indemnity claims in connection with the Acquisition. (3) As of January 31, 2025, other current liabilities included $ 8.8 million related to the incentive pool allocated to founders and early employees in connection with the Acquisition. 10. 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, 2024, the number of shares of common stock available for issuance under the 2016 Plan was automatically increased according to its terms by 4,994,684 shares. In addition, the shares reserved for issuance under the 2016 Plan also include shares returned to the 2008 Plan as the result of expiration or termination of options or other awards. As of January 31, 2025, the number of shares available for future award under the 2016 Plan is 8,352,951 . Hearsay Social, Inc. 2019 Equity Incentive Plan In connection with the Acquisition, the Company assumed the Hearsay Social, Inc. 2019 Equity Incentive Plan (the "Hearsay Plan"), including all outstanding restricted stock units ("RSUs") held by continuing Hearsay employees. These assumed awards were converted into approximately 2.1 million RSUs to receive shares of the Company’s common stock at the effective time of the Acquisition and are generally subject to their original terms and conditions under the Hearsay Plan. The Hearsay Plan allows for the issuance of up to approximately 6.0 million shares of the Company’s common stock. Under the Hearsay Plan, the Company may grant stock options with an exercise price that is no less than the fair market value on the date of grant, restricted stock, RSUs, and other stock-based awards to the Company’s employees. Equity awards granted under the Hearsay Plan following the Acquisition are expected to be on similar terms and consistent with similar grants made pursuant the Company’s 2016 Equity Incentive Plan. Awards canceled and forfeited and shares withheld to satisfy tax withholding obligations become further available for future issuance under the Hearsay Plan. As of January 31, 2025, the number of shares available for future award under the Hearsay Plan is 3,565,676 . 83 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 requisite service period of the applicable award generally using the straight-line method or accelerated attribution method. The following table summarizes the Company's stock-based compensation expense for equity classified awards for the periods presented: Fiscal year ended January 31, (in thousands) 2025 2024 2023 Equity classified awards: Cost of revenue $ 2,753 $ 2,900 $ 5,042 Sales and marketing 15,583 15,067 22,961 Research and development 10,265 11,349 16,401 General and administrative 23,179 15,645 18,674 Total stock-based compensation expense $ 51,780 $ 44,961 $ 63,078 During the fiscal years ended January 31, 2025, 2024 and 2023, the Company capitalized $ 0.3 million, $ 0.3 million and $ 0.5 million, respectively, of stock-based compensation related to software development. As of January 31, 2025, there was approximately $ 52.5 million of total unrecognized compensation cost related to unvested stock-based awards, which is expected to be recognized over an estimated remaining weighted-average vesting period of approximately 1.79 years. In addition, certain liability classified awards were granted in connection with the Acquisition and relate to portions of the incentive pool and earnout that generally vest over one year from the Acquisition Date. These awards may be settled in cash or shares at the Company's election, and are measured at fair value at each reporting date based on their expected value, with compensation cost being recognized over the related service period. The corresponding liabilities associated with these awards are included within accounts payable, accrued expenses and other current liabilities, and other long term liabilities on the Company's consolidated balance sheet depending on the estimated settlement date of the award. The following table summarizes the Company's compensation expense for liability classified awards for the periods presented: Fiscal year ended January 31, (in thousands) 2025 2024 2023 Liability classified awards: Cost of revenue $ 201 $ — $ — Sales and marketing 5,782 — — Research and development 2,419 — — General and administrative 703 — — Total compensation expense $ 9,105 $ — $ — 84 Stock Options The following table summarizes the activity related to the Company's stock options: Options Outstanding Outstanding Stock Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (in years) Aggregate Intrinsic Value (in thousands) Balance, January 31, 2024 2,021,494 $ 6.26 2.20 $ 989 Granted — $ — Exercised ( 366,671 ) $ 3.52 Forfeited or canceled ( 88,689 ) $ 8.45 Balance, January 31, 2025 1,566,134 $ 6.78 1.48 $ 450 Vested and expected to vest 1,566,134 $ 6.78 1.48 $ 450 Exercisable at January 31, 2025 1,566,134 $ 6.78 1.48 $ 450 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 January 31, 2025. 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 $ 0.8 million, $ 6.3 million and $ 0.9 million for the fiscal years ended January 31, 2025, 2024 and 2023, 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 ("RSUs"): Outstanding Weighted-Average Grant Date Fair Value Balance, January 31, 2024 9,790,748 $ 7.54 Granted 8,797,252 $ 5.85 Vested and converted to shares ( 5,437,573 ) $ 7.46 Forfeited or canceled ( 2,835,228 ) $ 6.71 Balance, January 31, 2025 10,315,199 $ 6.37 The estimated weighted-average grant date fair value of restricted stock and RSUs granted was $ 5.85 , $ 8.28 , and $ 5.71 per share for the fiscal years ended January 31, 2025, 2024, and 2023, respectively. The fair value of the common stock is the Company’s closing stock price as reported on the New York Stock Exchange. The total fair value of restricted stock and RSUs vested was $ 40.6 million, $ 40.7 million, and $ 63.5 million for the fiscal years ended January 31, 2025, 2024, and 2023, respectively. Employee Stock Purchase Plan The Company offers an ESPP to eligible employees. The ESPP allows employees to purchase shares of common stock at a 15 % discount, based on the lower of the fair market value per share at the commencement of or completion of the offering period. Offering periods commence on the first trading day on or after March 15 th and September 15 th of each year, and end on the first trading day, approximately six months later. In connection with the offering period which ended on March 15, 2024, 513,277 shares of common stock were purchased under the ESPP at a purchase price of $ 4.58 per share for total proceeds of $ 2.4 million. In connection with the offering period which ended on September 15, 2024, 292,160 shares of common stock were purchased under the ESPP at a purchase price of $ 4.58 per share for total proceeds of $ 1.3 million. 85 The Black-Scholes option-pricing model assumptions used to calculate the fair value of shares, estimated at commencement of the offering period, were as follows: Fiscal year ended January 31, 2025 2024 2023 Expected life (years) 0.50 0.50 0.50 Expected volatility 46.36 % - 52.80 % 55.12 % - 76.43 % 48.87 % - 63.52 % Dividend yield — % — % — % Risk-free rate 4.55 % - 5.38 % 4.73 % - 5.49 % 0.86 % - 3.78 % During the fiscal years ended January 31, 2025, 2024 and 2023, the Company recorded stock-based compensation expense associated with the ESPP of $ 1.4 million, $ 1.7 million and $ 1.5 million, respectively. As of January 31, 2025, total unrecognized compensation cost related to the ESPP was $ 0.2 million, net of estimated forfeitures, which will be amortized over a weighted-average remaining period of 0.12 years. Performance-Based Restricted Stock Units In March 2022, the Company made a grant to an executive in the form of 2,000,000 performance-based restricted stock units ("PSUs"). This grant was outside of the Company’s 2016 Equity Incentive Plan, and will vest over approximately a four-year period following the achievement of certain stock price targets. During the fiscal year ended January 31, 2024, the Company granted additional PSUs to certain executives under the Company’s 2016 Equity Incentive Plan, which vest over approximately a one-year period following the achievement of certain stock price targets. In January 2024, the Company made an additional grant to an executive in the form of 1,250,000 target PSUs under the 2016 Equity Incentive Plan. The total number of shares that will be eligible to vest ranges from 0 % to 200 % of the target PSUs and is based on the total shareholder return ("TSR") of the Company, relative to the TSR of companies in the S&P Software and Services Select Index over specified performance periods. These awards vest over approximately a one to two-year period. The PSUs granted by the Company contain market and service conditions, and the fair value of these awards is determined using a Monte Carlo simulation model on the date of grant. Stock-based compensation expense associated with PSUs is recognized using the accelerated attribution method and recognized over the requisite service period. The following table summarizes the activity related to the Company’s PSUs: Number of Performance-Based Restricted Stock Units Weighted-Average Grant Date Fair Value Balance as of January 31, 2024 3,555,000 $ 5.98 Granted — $ — Vested — $ — Forfeited or canceled ( 60,000 ) $ 6.47 Balance as of January 31, 2025 3,495,000 $ 5.97 As of January 31, 2025, the market conditions accompanying the PSUs were not satisfied and therefore, no shares vested. During the fiscal years ended January 31, 2025, 2024 and 2023, the Company recognized stock-based compensation expense related to PSUs of approximately $ 8.3 million, $ 4.6 million and $ 2.9 million, respectively. As of January 31, 2025, the total unrecognized stock-based compensation expense related to unvested PSUs was $ 4.9 million, which will be amortized over a weighted-average remaining period of 0.98 years. 11. Equity 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 January 31, 2025 and 2024, no shares of preferred stock were issued or outstanding. 86 Common Stock As of January 31, 2025 and 2024, 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, 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 January 31, 2025, the Company had 26,017,782 shares of treasury stock carried at its cost basis of $ 130.3 million . As of January 31, 2024, the Company had 23,330,254 shares of treasury stock carried at its cost basis of $ 112.2 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. In September 2023, the Board of Directors authorized an additional $ 50.0 million to the share repurchase program. During the fiscal year ended January 31, 2025, 2,687,528 shares were purchased for a total cost of $ 18.1 million, excluding broker commissions. As of January 31, 2025, a total of 19,512,448 shares have been purchased for a total cost of $ 118.1 million since the commencement of the program, excluding broker commissions, and approximately $ 31.9 million remained available for future purchases. In March 2025, the Board of Directors authorized an additional $ 50.0 million to the share repurchase 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. 12. Debt On March 11, 2020, the Company entered into a credit agreement (the “Credit Agreement”) with Silicon Valley Bank (“SVB”). In January 2021, the Company amended the Credit Agreement which modified the conditions pursuant to which subsidiaries are required to become guarantors. On December 22, 2022, the Company entered into a second amendment (“Amendment No. 2”) to the Credit Agreement, dated March 11, 2020, and on July 26, 2024, the Company 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 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 the Company’s 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 1.75 % and SOFR plus 2.25 %, depending on the Company’s 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 the Company’s consolidated total leverage ratio. The Company is also obligated to pay a commitment fee on the unused portion of the facility at a rate of 0.25 % per annum. 87 The obligations under the Credit Facility are secured by a lien on substantially all of the Company's tangible and intangible property and by a pledge of all of the Company's 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 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, the Company was 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. 13. Income Taxes The domestic and international components of the Company's loss from operations before income taxes are as follows: Fiscal year ended January 31, (in thousands) 2025 2024 2023 Domestic $ ( 33,349 ) $ ( 4,444 ) $ ( 66,194 ) International 5,291 4,106 2,336 Loss from operations before income taxes $ ( 28,058 ) $ ( 338 ) $ ( 63,858 ) The Company's provision for income taxes is comprised of the following: Fiscal year ended January 31, (in thousands) 2025 2024 2023 Current: Federal $ ( 63 ) $ ( 43 ) $ ( 42 ) State ( 1,359 ) ( 912 ) ( 491 ) International ( 1,893 ) ( 1,262 ) ( 732 ) Total current ( 3,315 ) ( 2,217 ) ( 1,265 ) Deferred: Federal 2,378 ( 4 ) ( 4 ) State 1,007 ( 11 ) ( 3 ) International 40 ( 60 ) ( 808 ) Total deferred 3,425 ( 75 ) ( 815 ) Total benefit from (provision for) income taxes $ 110 $ ( 2,292 ) $ ( 2,080 ) The Company’s current tax provision is primarily attributable to profitable jurisdictions outside of the United States (U.S.) and U.S. state income taxes due to limitations imposed on state operating loss ("NOLs") carryforwards and state margin tax. During the fiscal year ended January 31, 2025, the Company recorded a tax benefit of $ 3.4 million from a partial release of the valuation allowance in connection with the Acquisition. The net deferred tax liability from the Acquisition provided a source of additional income to support the realizability of the Company's pre-existing deferred tax assets and as a result, the Company released a portion of its valuation allowance. 88 The Company reconciled its income taxes at the federal statutory income tax rate to the provision for income taxes included within its consolidated statements of operations and comprehensive loss. The Company elected to account for its Global Intangible Low-Taxed Income as an expense in the period it is incurred. The reconciliation is as follows: Fiscal year ended January 31, (in thousands) 2025 2024 2023 U.S. federal tax (provision) benefit at statutory rate $ 5,892 $ 71 $ 13,410 State taxes, net of federal benefit 2,711 ( 1,286 ) 479 Foreign tax rate differential ( 317 ) ( 191 ) ( 42 ) Non-deductible expenses ( 2,209 ) ( 1,902 ) ( 1,492 ) R&D credit carryforward 3,725 15,656 — Changes in valuation allowance ( 2,133 ) ( 13,913 ) ( 4,399 ) Rate change ( 1 ) 386 62 Stock-based compensation ( 758 ) ( 1,593 ) ( 2,500 ) Net excess tax benefits (shortfalls) from stock-based compensation ( 1,334 ) 213 ( 6,498 ) Return to provision adjustment ( 56 ) ( 25 ) 235 Global intangible low-taxed income ( 1,191 ) — ( 1,096 ) Acquisition-related costs ( 3,532 ) — — Other, net ( 687 ) 292 ( 239 ) Total benefit from (provision for) income taxes $ 110 $ ( 2,292 ) $ ( 2,080 ) 89 Deferred Income Taxes Deferred income taxes reflect the net tax effects of (a) temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes, and (b) operating loss and tax credit carryforwards. The components of the Company's deferred income taxes were as follows: As of January 31, (in thousands) 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 97,463 $ 109,415 Tax credit carryforwards 22,577 19,668 Stock-based compensation 5,905 3,329 Allowance for doubtful accounts 524 262 Operating lease liability 23,392 25,968 Accrued expenses 6,420 1,965 Unearned revenue 65 19 Property and equipment 199 — Capitalized research & experimental expenditures 51,062 25,409 Intangible assets — 10,803 Other 1,451 227 Total deferred tax assets 209,058 197,065 Less: valuation allowance ( 171,650 ) ( 169,517 ) Deferred tax assets, net of valuation allowance 37,408 27,548 Deferred tax liabilities: Property and equipment — ( 732 ) Costs to obtain revenue contracts ( 5,916 ) ( 7,679 ) Operating lease right-of-use assets ( 16,638 ) ( 18,573 ) Intangible assets ( 14,427 ) — Other ( 533 ) ( 700 ) Total deferred tax liabilities ( 37,514 ) ( 27,684 ) Net deferred tax liability $ ( 106 ) $ ( 136 ) As of January 31, 2025, for federal income tax purposes, the Company had $ 321.2 million of gross U.S. federal NOL carryforwards, with pre-2018 NOLs expiring starting in fiscal 2036 with others indefinitely carried forward. As of January 31, 2025, for state income tax purposes, the Company had $ 21.1 million of post-apportioned, tax-effected NOL carryforwards, which expire in fiscal 2026 through fiscal 2045. As of January 31, 2025, the Company had $ 8.0 million of tax-effected foreign NOL carryforwards which expire starting in fiscal 2026. As of January 31, 2025, for federal income tax purposes, the Company had $ 28.7 million of gross U.S. federal research and development tax credits carryforwards which expire starting in fiscal 2037. Utilization of the Company’s NOLs and tax credit carryforwards in the future will be dependent upon its ability to generate taxable income and could be limited due to ownership changes, as defined under the provisions of Section 382 of the Code and similar state provisions. Utilization of the Company’s foreign NOL carryforwards in the future will be dependent upon local tax laws and regulations. The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance 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. During the fiscal year ended January 31, 2025, the valuation allowance had a net increase of $ 2.1 million from approximately $ 169.5 million to $ 171.6 million, primarily due to increases in U.S. deferred tax assets resulting from capitalization and amortization of research and development expenses, and generation of U.S. research and development tax credits, then netted with the net deferred tax liability from the Acquisition and impact of NOLs utilized in the current period. During the fiscal year ended January 31, 2024, the valuation allowance increased $ 13.9 million from approximately $ 155.6 million to $ 169.5 million, primarily due to increases in U.S. deferred tax assets resulting from 90 capitalization and amortization of research and development expenses, and generation of U.S. research and development tax credits, then netted with the impact of NOLs utilized in the current period. The Company will continue to assess the realizability of the deferred tax assets in each applicable jurisdiction going forward. Other Considerations The Company generally does not provide deferred income taxes for the undistributed earnings of its foreign subsidiaries where the Company intends to reinvest such earnings indefinitely. During the current year, the Company changed its assertion with respect to certain subsidiaries' undistributed earnings; however, the Company does not expect any incremental U.S. income taxes or local withholding taxes. For the remaining subsidiaries that are permanently reinvested as of January 31, 2025, the Company's undistributed foreign earnings and unrecorded deferred income taxes are not material. A reconciliation of the beginning and ending balance of total unrecognized tax benefits for the fiscal years ended January 31, 2025, 2024, and 2023 is as follows: Fiscal year ended January 31, (in thousands) 2025 2024 2023 Beginning of period $ 4,920 $ — $ 288 Tax positions taken in prior period Gross increases 942 4,404 — Gross decreases — — ( 272 ) Tax positions taken in current period Gross increases 669 516 — Currency translation effect — — ( 16 ) End of period $ 6,531 $ 4,920 $ — During the fiscal year ended January 31, 2024, the Company completed an analysis of its historical U.S. research and development tax credits and recorded a corresponding increase in the uncertain tax position. The Company recognizes accrued interest and penalties related to unrecognized tax benefits within benefit from (provision for) income taxes. The Company did not recognize interest and penalties in fiscal years ended January 31, 2025 and 2024, and recognized insignificant amounts in fiscal 2023. As of January 31, 2025 and 2024, none of the accrued unrecognized tax benefits, if recognized, would increase the benefit from or reduce the (provision for) income taxes, respectively, or the Company's effective tax rate. The Company does not expect any unrecognized tax benefits to be recognized within the next 12 months. The Company is subject to income tax examinations in the United States and various state and foreign jurisdictions. The Company’s most significant operations are in the United States and the earliest open tax year subject to potential examination in the United States is 2008. 14. Leases The Company's operating lease arrangements are principally for office space. As of January 31, 2025, the Company had $ 18.6 million of operating lease liabilities, current, $ 76.8 million of operating lease liabilities, non-current, $ 67.5 million of operating lease right-of-use assets, and no financing leases, on its consolidated balance sheet. The operating lease arrangements included in the measurement of lease liabilities had a weighted-average remaining lease term of 5.9 years and a weighted-average discount rate of 6.0 %, as of January 31, 2025. During the fiscal year ended January 31, 2025, the Company paid $ 17.2 million for amounts included in the measurement of lease liabilities and obtained $ 0.4 million of operating lease right-of-use assets in exchange for lease obligations in connection with the Acquisition. The following table summarizes the Company's lease expense for the periods presented: Fiscal year ended January 31, (in thousands) 2025 2024 2023 Operating lease expense $ 14,894 $ 15,637 $ 16,196 Short-term lease expense 748 709 792 Variable lease expense 9,696 10,082 9,550 Total lease expense $ 25,338 $ 26,428 $ 26,538 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. 91 The total remaining operating lease payments included in the measurement of lease liabilities on the Company's consolidated balance sheet as of January 31, 2025, was as follows (in thousands): Fiscal year ending January 31: Operating Lease Payments 2026 $ 19,201 2027 19,334 2028 19,431 2029 19,291 2030 17,336 2031 and thereafter 19,200 Total gross operating lease payments 113,793 Less: tenant allowances — Total net operating lease payments 113,793 Less: imputed interest ( 18,380 ) Total lease liabilities, reflecting the present value of net lease payments $ 95,413 15. 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 Publisher 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 2026 and 2035. As of January 31, 2025, the Company's contractual obligations are as follows (in thousands): Fiscal year ending January 31: Leases Other 2026 $ 19,201 $ 41,446 2027 19,334 20,924 2028 19,431 13,087 2029 19,291 16 2030 17,336 16 2031 and thereafter 19,200 64 Total $ 113,793 $ 75,553 The Company may also be required to pay up to $ 75.0 million to the former holders of Hearsay's outstanding equity interests, subject to the achievement of certain ARR milestones over a two-year period, as well as make payments up to $ 20.0 million related to an incentive pool. Payments can be settled in cash or shares at the Company's election and are estimated to occur in fiscal years 2026 and 2027. Additionally, as of January 31, 2025, the remaining escrow balance of $ 15.5 million, held as partial security for certain indemnification obligations, is expected to be released following the resolution of the related contingencies. See Note 4 "Business Combination" for additional information. 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 Company's 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 or in instances of negligence, fraud or willful misconduct by the Company. To date, the Company has not incurred any material costs 92 as a result of such obligations and has not accrued any significant liabilities related to such obligations in the accompanying 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. 16. 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: Fiscal year ended January 31, (in thousands, except share and per share data) 2025 2024 2023 Numerator: Net loss attributable to common stockholders $ ( 27,948 ) $ ( 2,630 ) $ ( 65,938 ) Denominator: Weighted-average common shares outstanding 126,850,809 124,056,949 125,250,723 Net loss per share attributable to common stockholders, basic and diluted $ ( 0.22 ) $ ( 0.02 ) $ ( 0.53 ) 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, restricted stock units, and performance-based restricted stock units where the market conditions have not been met 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 January 31, 2025 2024 2023 Options to purchase common stock 1,566,134 2,021,494 4,593,704 Restricted stock and restricted stock units 10,315,199 9,790,748 11,564,867 Shares estimated to be purchased under ESPP 366,055 487,529 517,140 Performance-based restricted stock units (1) 3,495,000 3,555,000 2,000,000 Total anti-dilutive common equivalent shares 15,742,388 15,854,771 18,675,711 (1) An additional 1.3 million shares of common stock may be awarded for certain PSUs based on the Company's total shareholder return ("TSR") relative to the TSR of companies in the S&P Software and Services Select Index over specified performance periods. See Note 10 "Stock-Based Compensation", for further discussion . In connection with the Acquisition, the Company may also be required to pay up to $ 75.0 million to the former holders of Hearsay's outstanding equity interests, subject to the achievement of certain ARR milestones over a two-year period. Payment can be settled in cash or shares at the Company's election. In addition, an incentive pool of $ 20.0 million is payable to Hearsay founders, early employees and current employees, which can be settled in cash or shares at the Company's election. 93 17. Segment Information The Company operates as one operating segment for which the CODM uses consolidated net (loss) income to measure segment profit or loss. This measure of segment profit or loss is used by the CODM to allocate resources and assess performance. See Note 2 "Summary of Significant Accounting Policies" for more information about the Company's segment policy. The following table is a summary of the significant expenses and consolidated net loss provided to the CODM: Fiscal year ended January 31, (in thousands) 2025 2024 2023 Revenue $ 420,957 $ 404,322 $ 400,850 Less: Cost of revenue (1) 89,364 84,568 98,918 Sales and marketing (1) 149,390 163,763 188,518 Research and development (1) 64,319 60,691 54,502 General and administrative (1) 62,279 56,540 60,662 Other segment expenses (2) 83,553 41,390 64,188 Consolidated net loss $ ( 27,948 ) $ ( 2,630 ) $ ( 65,938 ) (1) Excludes stock-based compensation expense, amortization of acquired intangibles and acquisition-related costs inclusive of transaction and related costs, subsequent fair value movements in contingent consideration, and compensation arrangements. The significant expense categories align with the information that is regularly provided to the CODM. (2) Other segment expenses include stock-based compensation expense, amortization of acquired intangibles and acquisition-related costs inclusive of transaction and related costs, subsequent fair value movements in contingent consideration, and compensation arrangements. Other segment expenses also include interest (income) expense, net, benefit from (provision for) income taxes and other expense (income), net. 18. Subsequent Events On February 7, 2025, the Company completed its 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, the Company 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. The Company is currently evaluating the impact of this acquisition on its consolidated financial statements. On March 4, 2025 the Board of Directors authorized an additional $ 50.0 million to the share repurchase program. 94 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.