0001614178-20-000157.txt : 20200609 0001614178-20-000157.hdr.sgml : 20200609 20200609161923 ACCESSION NUMBER: 0001614178-20-000157 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 72 CONFORMED PERIOD OF REPORT: 20200430 FILED AS OF DATE: 20200609 DATE AS OF CHANGE: 20200609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Yext, Inc. CENTRAL INDEX KEY: 0001614178 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 208059722 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38056 FILM NUMBER: 20952045 BUSINESS ADDRESS: STREET 1: 1 MADISON AVENUE, 5TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10010 BUSINESS PHONE: 1-888-444-2988 MAIL ADDRESS: STREET 1: 1 MADISON AVENUE, 5TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10010 10-Q 1 yext-20200430.htm 10-Q yext-20200430
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
            For the transition period from                  to                 
Commission File Number: 001-38056
YEXT, INC.
(Exact name of registrant as specified in its charter)
yext-20200430_g1.jpg
Delaware
20-8059722
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1 Madison Ave, 5th Floor
New York, NY 10010
(Address of principal executive offices, including zip code)
(212) 994-3900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
YEXT
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer
Accelerated filer
Non-accelerated filer
 ☐
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).    Yes    No  
As of June 1, 2020, the registrant had 117,723,196 shares of common stock, $0.001 par value per share outstanding.



TABLE OF CONTENTS
PAGE




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

4


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
YEXT, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)
April 30, 2020January 31, 2020
Assets
Current assets:
Cash and cash equivalents
$248,796  $256,076  
Accounts receivable, net of allowances of $1,741 and $995, respectively
47,308  80,583  
Prepaid expenses and other current assets
17,202  12,730  
Costs to obtain revenue contracts, current
28,143  28,423  
Total current assets
341,449  377,812  
Restricted cash
  12,100  
Property and equipment, net
49,033  26,200  
Operating lease right-of-use assets
114,101  111,973  
Costs to obtain revenue contracts, non-current
22,694  26,051  
Goodwill
4,494  4,534  
Intangible assets, net
1,148  1,343  
Other long term assets
3,871  3,607  
Total assets
$536,790  $563,620  
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities
$55,799  $59,482  
Unearned revenue, current
152,565  176,806  
Operating lease liabilities, current
8,796  8,640  
Total current liabilities
217,160  244,928  
Operating lease liabilities, non-current
123,109  115,187  
Other long term liabilities
2,610  2,293  
Total liabilities
342,879  362,408  
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 50,000,000 shares authorized at April 30, 2020 and January 31, 2020; zero shares issued and outstanding at April 30, 2020 and January 31, 2020
    
Common stock, $0.001 par value per share; 500,000,000 shares authorized at April 30, 2020 and January 31, 2020; 124,029,508 and 122,335,709 shares issued at April 30, 2020 and January 31, 2020, respectively; 117,524,174 and 115,830,375 shares outstanding at April 30, 2020 and January 31, 2020, respectively
124  122  
Additional paid-in capital
659,262  636,008  
Accumulated other comprehensive loss
(1,693) (360) 
Accumulated deficit
(451,877) (422,653) 
Treasury stock, at cost
(11,905) (11,905) 
Total stockholders’ equity
193,911  201,212  
Total liabilities and stockholders’ equity
$536,790  $563,620  
See the accompanying notes to the condensed consolidated financial statements.
5


YEXT, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except share and per share data)
(Unaudited)
Three months ended April 30,
20202019
Revenue
$85,351  $68,708  
Cost of revenue
21,184  16,473  
Gross profit
64,167  52,235  
Operating expenses:
Sales and marketing
58,520  46,398  
Research and development
14,378  9,906  
General and administrative
20,458  15,191  
Total operating expenses
93,356  71,495  
Loss from operations
(29,189) (19,260) 
Interest income
468  906  
Interest expense
(137) (53) 
Other expense, net
(84) (206) 
Loss from operations before income taxes
(28,942) (18,613) 
(Provision for) benefit from income taxes
(282) (346) 
Net loss
$(29,224) $(18,959) 
Net loss per share attributable to common stockholders, basic and diluted
$(0.25) $(0.18) 
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted
116,606,835  106,453,558  
Other comprehensive (loss) income:
Foreign currency translation adjustment
$(1,333) $314  
Unrealized gain on marketable securities, net
  35  
Total comprehensive loss
$(30,557) $(18,610) 
See the accompanying notes to the condensed consolidated financial statements.



6


YEXT, INC.
Condensed Consolidated Statements of Stockholders' Equity
(In thousands)
(Unaudited)
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
SharesAmountCapitalLossDeficitStockEquity
Balance, January 31, 2019
102,173  $109  $398,882  $(1,428) $(301,109) $(11,905) $84,549  
Common stock offering, net of issuance costs of $530
7,000  7  146,463  —  —  —  146,470  
Exercise of stock options3,308  3  14,852  —  —  —  14,855  
Vested restricted stock units converted to common shares2,946  3  (3) —  —  —    
Issuance of restricted stock11  —  —  —  —  —    
Issuance of common stock under employee stock purchase plan392  —  6,627  —  —  —  6,627  
Stock-based compensation—  —  69,187  —  —  —  69,187  
Other comprehensive income—  —  —  1,068  —  —  1,068  
Net loss—  —  —  —  (121,544) —  (121,544) 
Balance, January 31, 2020
115,830  122  636,008  (360) (422,653) (11,905) 201,212  
Exercise of stock options391  1  1,895  —  —  —  1,896  
Vested restricted stock units converted to common shares903  1  (1) —  —  —    
Issuance of restricted stock26  —  —  —  —  —    
Issuance of common stock under employee stock purchase plan374  —  3,743  —  —  —  3,743  
Stock-based compensation—  —  17,617  —  —  —  17,617  
Other comprehensive loss—  —  —  (1,333) —  —  (1,333) 
Net loss—  —  —  —  (29,224) —  (29,224) 
Balance, April 30, 2020
117,524  $124  $659,262  $(1,693) $(451,877) $(11,905) $193,911  
See the accompanying notes to the condensed consolidated financial statements.

7


YEXT, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three months ended April 30,
20202019
Operating activities:
Net loss
$(29,224) $(18,959) 
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization
2,045  1,941  
Bad debt expense
759  40  
Stock-based compensation expense
17,372  13,216  
Amortization of operating lease right-of-use assets
3,457  1,578  
Other, net190  (32) 
Changes in operating assets and liabilities:
Accounts receivable
32,395  22,195  
Prepaid expenses and other current assets
(5,064) 60  
Costs to obtain revenue contracts
3,465  (365) 
Other long term assets
(479) (1,913) 
Accounts payable, accrued expenses and other current liabilities
(4,650) (6,338) 
Unearned revenue
(24,161) (9,708) 
Operating lease liabilities
2,679  (1,242) 
Other long term liabilities
559  346  
Net cash (used in) provided by operating activities
(657) 819  
Investing activities:
Maturities of marketable securities
  24,697  
Capital expenditures
(21,275) (831) 
Net cash (used in) provided by investing activities
(21,275) 23,866  
Financing activities:
Proceeds from common stock offering, net of underwriting discounts and commissions
  147,000  
Payments of deferred offering costs
  (208) 
Proceeds from exercise of stock options
1,879  5,000  
Payments of deferred financing costs
(394) (163) 
Proceeds, net from employee stock purchase plan withholdings
1,483  1,868  
Net cash provided by financing activities
2,968  153,497  
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(416) (174) 
Net (decrease) increase in cash, cash equivalents and restricted cash
(19,380) 178,008  
Cash, cash equivalents and restricted cash at beginning of period
268,176  91,755  
Cash, cash equivalents and restricted cash at end of period
$248,796  $269,763  
Supplemental reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets:
(in thousands)
April 30, 2020April 30, 2019
Cash and cash equivalents
$248,796  $257,663  
Restricted cash
  12,100  
Total cash, cash equivalents and restricted cash
$248,796  $269,763  
See the accompanying notes to the condensed consolidated financial statements.
8


YEXT, INC.
Notes to Condensed Consolidated Financial Statements

1. Organization and Description of Business
Description of Business
Yext, Inc. ("Yext" or the "Company"), a search experience cloud company, puts businesses in control of their facts online by delivering brand-verified answers. The Yext platform lets businesses structure the facts about their brands in a database called a Knowledge Graph. The Yext platform is built to leverage the structured data stored in the Knowledge Graph to power direct answers on a business' own website, as well as across approximately 175 service and application providers, which the Company refers to as its Knowledge Network, and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp. The Yext platform powers all of the Company's key features, including Listings, Pages, and Answers, along with its other features and capabilities.
Fiscal Year
The Company's fiscal year ends on January 31st. References to fiscal 2021, for example, are to the fiscal year ending January 31, 2021.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2020, filed with the SEC on March 20, 2020 (the "Form 10-K"). The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.
The condensed consolidated balance sheet as of January 31, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by GAAP on an annual reporting basis.
In the opinion of management, the accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods. The results for the three months ended April 30, 2020 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending January 31, 2021, or any other period.
Except as described elsewhere in this Note 2 under the heading “Recent Accounting Pronouncements”, there have been no material changes to the Company's significant accounting policies as described in the Form 10-K.
Certain prior period amounts have been reclassified to conform to the current period presentation.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of those financial statements and the reported amounts of revenue and expense during the reporting period. These estimates include, but are not limited to, the standalone selling prices ("SSP") of performance obligations, the incremental borrowing rate associated with lease liabilities, the useful life of capitalized costs to obtain customer contracts, income taxes, and the fair value of stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations.
Segment Information
The Company is the provider of the Yext platform and operates as one operating segment. An operating segment is defined as a component of an enterprise for which separate financial information is evaluated regularly by the chief operating decision makers ("CODM"). The Company defines its CODM as its executive officers, and their role is to make decisions about allocating resources and assessing performance. The Company's business operates in one operating segment as all of the Company's offerings operate on the Yext platform and are deployed in an identical way, with its CODM evaluating the Company's financial information, resources and performance of these resources on a consolidated basis. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.
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Concentration of Credit Risk
Certain financial instruments that could be exposed to a concentration of credit risk may include cash and cash equivalents, marketable securities and accounts receivable. The Company deposits its cash with financial institutions, and such deposits, at times, may exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents to date. Collateral is not required for accounts receivable. At April 30, 2020 and January 31, 2020, no single customer accounted for more than 10% of the Company's accounts receivable. No single customer accounted for more than 10% of the Company's revenue for the three months ended April 30, 2020 and 2019, respectively.
Recent Accounting Pronouncements
Adoption of New Accounting Standard - ASU 2016-13
In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, "Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments." The new model uses a forward-looking expected loss method, which requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information, and requires expected credit losses to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. The Company adopted this standard on February 1, 2020, and the application of the new forward-looking expected loss model to the allowance for doubtful accounts did not have a material effect on its condensed consolidated financial statements.
New Accounting Standard To Be Adopted - ASU 2019-12
In December 2019, the FASB issued ASU 2019-12 "Simplifying the Accounting for Income Taxes", which simplifies the accounting for income taxes, eliminates certain exceptions within ASC Topic 740, "Income Taxes," and clarifies certain aspects of the current guidance to promote consistency among reporting entities. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company plans to adopt this standard on February 1, 2021 and is currently evaluating the effect on the Company's condensed consolidated financial statements.
3. Revenue
Performance Obligations
The Company has identified that it has two distinct performance obligations: subscription and associated support to the Yext platform and professional services. The Company's revenue is predominantly related to its subscription and associated support to the Yext platform. Professional services revenue accounted for approximately 7% and less than 5% of the Company's total revenue for the three months ended April 30, 2020 and 2019, respectively.
Geographic Region
The Company disaggregates its revenue from contracts with customers by geographic region, as it believes this best depicts how the nature, amount, timing, and uncertainty of its revenues and cash flows are affected by economic factors. Revenue by geographic region is determined based on the region of the Company's contracting entity, which may be different than the region of its customers. The following table presents the Company's revenue by geographic region:
Three months ended April 30,
(in thousands)20202019
North America$69,227  $56,512  
International16,124  12,196  
Total revenue$85,351  $68,708  
North America revenue is predominantly attributable to the United States, but also includes Canada. International revenue is predominantly attributable to European countries, but also includes Japan.
The Company's revenue attributable to the United States represented 81% and 82% of total revenue for the three months ended April 30, 2020 and 2019, respectively. Its revenue attributable to Switzerland, which serves as one of the Company's contracting entities for Europe, represented 15% and 12% of total revenue for the three months ended April 30, 2020 and 2019, respectively. No other countries represented more than 10% of total revenue for the three months ended April 30, 2020 and 2019, respectively.
Contract Liabilities
A contract liability is an obligation to transfer goods or services for which consideration has been received or is due to a customer. The Company's contract liabilities consist primarily of unearned revenue and, to a lesser extent, customer deposits.
As of April 30, 2020, unearned revenue, current was $152.6 million and unearned revenue, non-current was $0.2 million and included within other long term liabilities on the Company's condensed consolidated balance sheet. Revenue recognized of $70.9 million during the three months ended April 30, 2020 was included in unearned revenue at the beginning of the period.
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Customer deposits represent payments received in advance in instances where a revenue contract is cancelable in nature, and therefore the Company does not have an unconditional obligation to transfer control to a customer. As of April 30, 2020 and January 31, 2020, customer deposits of $1.5 million and $0.9 million were included in Accounts payable, accrued expenses and other current liabilities on the Company's condensed 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 revenue in future periods, and may be influenced by several factors, including seasonality, the timing of renewals, and contract terms. As of April 30, 2020, the Company had $293.8 million of remaining performance obligations, of which $277.8 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, 2020, the Company had $328.1 million of remaining performance obligations.
4. Fair Value of Financial Instruments
Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Subsequent changes in fair value of these financial assets and liabilities are recognized in earnings or other comprehensive (loss) income when they occur. When determining the fair value measurements for assets and liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurement or assumptions that market participants would use in pricing the assets or liabilities, such as inherent risk, transfer restrictions, and credit risk.
The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1 inputs are based on quoted prices in active markets for identical assets or liabilities. 
Level 2 inputs are based on observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities. 
Level 3 inputs are based on unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities, and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability.
As of April 30, 2020 and January 31, 2020, the Company had money market funds included in cash and cash equivalents of $168.8 million and $190.8 million, respectively, as well as money market funds included in restricted cash of $12.1 million as of January 31, 2020. These assets were valued using quoted market prices and accordingly were classified as Level 1.
5. Goodwill and Intangible Assets
Goodwill
As of April 30, 2020 and January 31, 2020, the Company had goodwill of $4.5 million for each period.
Goodwill is not amortized but is subject to periodic testing for impairment at the reporting unit level, which is at or one level below the operating segment level. The Company operates as one operating segment, which represents its one reporting unit. The test for impairment is conducted annually each November 1st, or more frequently if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.
The Company determined that no events occurred or circumstances changed during the three months ended April 30, 2020 and 2019 that would more likely than not reduce the fair value of the Company's reporting unit below its carrying amount. However, if certain events occur or circumstances change, it may be necessary to record impairment charges in the future.
Intangible Assets
As of April 30, 2020 and January 31, 2020, the Company had intangible assets, net of $1.1 million and $1.3 million, respectively. The Company's intangible assets are amortized on a straight-line basis over their estimated useful lives. 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 three months ended April 30, 2020 and 2019 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 related to intangible assets totaled $0.1 million for each of the three months ended April 30, 2020 and 2019.
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6. Property and Equipment, Net
Property and equipment are recorded at cost and depreciated or amortized on a straight-line basis over their estimated useful lives. Property and equipment, net consisted of the following:
(in thousands)April 30, 2020January 31, 2020
Furniture and fixtures$1,317  $1,347  
Office equipment10,411  9,966  
Leasehold improvements 14,996  15,170  
Computer software10,099  10,099  
Construction in progress37,425  13,812  
Software in progress1,714  961  
Total property and equipment, gross75,962  51,355  
Less: accumulated depreciation(26,929) (25,155) 
Total property and equipment, net$49,033  $26,200  
Construction in progress consists primarily of leasehold improvements related to operating lease arrangements for office space. Software in progress consists of costs incurred in connection with additional functionality to the Yext platform.
As of April 30, 2020 and January 31, 2020, more than 80% of the Company's total property and equipment, net was attributable to the United States, and no other country represented more than 10% of the total property and equipment, net as of those periods. For the three months ended April 30, 2020, and 2019, depreciation expense was $1.9 million and $1.8 million, respectively.
7. Accounts Payable, Accrued Expenses and Other Current Liabilities
        Accounts payable, accrued expenses and other current liabilities consisted of the following:
(in thousands)April 30, 2020January 31, 2020
Accounts payable (1)
$23,987  $9,599  
Accrued employee compensation12,103  20,622  
Accrued Knowledge Network application provider fees2,587  5,561  
Accrued professional services and associated costs2,796  3,077  
Accrued employee stock purchase plan withholdings liability1,017  3,277  
Other current liabilities (2)
13,309  17,346  
Total accounts payable, accrued expenses and other current liabilities$55,799  $59,482  
(1) - As of April 30, 2020 and January 31, 2020, capital expenditures included in accounts payable were $7.8 million and $2.2 million, respectively.
(2) - As of April 30, 2020 and January 31, 2020, capital expenditures included in other current liabilities were $4.8 million and $7.0 million, respectively.
8. Stock-Based Compensation
2008 Equity Incentive Plan
        The Company's 2008 Equity Incentive Plan (the "2008 Plan"), as amended on March 10, 2016, allowed for the issuance of up to 25,912,531 shares of common stock. Awards granted under the 2008 Plan may be incentive stock options ("ISOs"), nonqualified stock options ("NQSOs"), restricted stock and restricted stock units. The 2008 Plan is administered by the Company's Board of Directors, which determines the terms of the options granted, the exercise price, the number of shares subject to option and the option vesting period. No ISO or NQSO is exercisable after 10 years from the date of grant, and option awards will typically vest over a four-year period.
        The 2008 Plan was terminated in connection with the adoption of the Company's 2016 Equity Incentive Plan (the "2016 Plan") in December 2016, and since the 2008 Plan termination the Company has not granted and will not grant any additional awards under the 2008 Plan. However, the 2008 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.
2016 Equity Incentive Plan
        In December 2016, the Company's Board of Directors adopted, and its stockholders approved, the 2016 Plan. The number of shares reserved for issuance under the 2016 Plan will increase on the first day of each fiscal year during the term of the 2016 Plan by the lesser of: (i) 10,000,000 shares, (ii) 4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company's Board of Directors may determine. On February 1, 2020, the number of shares
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of common stock available for issuance under the 2016 Plan was automatically increased according to its terms by 4,633,215 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 April 30, 2020, the number of shares available for future award under the 2016 Plan is 4,826,441.
Stock Options
       The following table summarizes the activity related to the Company's stock options:
Options Outstanding
Outstanding Stock OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Life (in years)Aggregate Intrinsic Value
(in thousands)
Balance, January 31, 2020
12,371,254  $7.05  5.53$98,028  
Granted  $  
Exercised(390,927) $4.86  
Forfeited or canceled(82,593) $5.27  
Balance, April 30, 2020
11,897,734  $7.14  5.36$68,628  
Vested and expected to vest11,622,932  $7.09  5.32$67,686  
Exercisable at April 30, 2020
10,304,489  $6.77  5.10$63,377  
The aggregate intrinsic value of options vested and expected to vest and exercisable is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of April 30, 2020. 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 $2.5 million and $18.8 million for the three months ended April 30, 2020 and 2019, respectively, and is calculated based on the difference between the exercise price and the fair value of the Company’s common stock as of the exercise date.
Restricted Stock and Restricted Stock Units
        The following table summarizes the activity related to the Company's restricted stock and restricted stock units:
OutstandingWeighted-Average Grant Date Fair Value
Balance as of January 31, 2020
9,910,729  $17.44  
Granted 524,142  $13.93  
Vested and converted to shares(907,276) $17.47  
Forfeited or canceled(198,318) $17.22  
Balance as of April 30, 2020
9,329,277  $17.25  
Employee Stock Purchase Plan
In March 2017, the Company's Board of Directors adopted, and its stockholders approved, the 2017 Employee Stock Purchase Plan ("ESPP"), which became effective on the date it was adopted. The number of shares of the Company's common stock that will be available for sale to employees under the ESPP increases annually on the first day of each fiscal year in an amount equal to the lesser of: (i) 2,500,000 shares; (ii) 1% of the outstanding shares of the Company's common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the administrator may determine. On February 1, 2020, the number of shares of common stock available for issuance under the ESPP was automatically increased according to its terms by 1,158,304 shares. As of April 30, 2020, a total of 3,159,733 shares of the Company's common stock are available for sale to employees under the ESPP.
In connection with the offering period which ended on March 16, 2020, 373,891 shares of common stock were purchased under the ESPP at a purchase price of $10.01 per share for total proceeds of $3.7 million.
A new offering period began on March 16, 2020 and will end on September 15, 2020. As of April 30, 2020, 330,046 shares are estimated to be purchased at the end of the offering period and $1.0 million has been withheld on behalf of employees for these future purchases under the ESPP and is included in accounts payable, accrued expenses and other current liabilities.
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The Black-Scholes option pricing model assumptions used to calculate the fair value of shares, estimated at commencement, to be purchased during an ESPP offering period were as follows:
Three months ended April 30,
20202019
Expected life (years)0.500.50
Expected volatility51.44%60.86%
Dividend yield
Risk-free rate0.29%2.52%
The expected life assumptions were based on each offering period's respective purchase date. The Company estimated the expected volatility assumption based on the historical volatility of its stock price. The risk-free rate assumptions were based on the U.S. treasury yield curve in effect at commencement of the offering period. The dividend yield assumption was zero as the Company has not historically paid any dividends and does not expect to declare or pay any dividends in the foreseeable future.
The Company recorded stock-based compensation expense associated with the ESPP of $0.6 million and $0.7 million for the three months ended April 30, 2020 and 2019, respectively. As of April 30, 2020, total unrecognized compensation cost related to ESPP was $0.9 million, net of estimated forfeitures, which will be amortized over a weighted-average remaining period of 0.38 years.
A new offering period commences on the first trading day on or after March 15th and September 15th each year, or on such other date as the administrator will determine, and will end on the first trading day, approximately six months later, on or after September 15th and March 15th, respectively. Participants may purchase the Company’s common stock through payroll deductions, up to a maximum of 15% of their eligible compensation. Unless changed by the administrator, the purchase price for each share of common stock purchased under the ESPP will be 85% of the lower of the fair market value per share on the first trading day of the applicable offering period or the fair market value per share on the last trading day of the applicable offering period.
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 on a straight-line basis, net of estimated forfeitures, over the requisite service period in the condensed consolidated statements of operations and comprehensive loss.
The Company's stock-based compensation expense for the periods presented was as follows:
Three months ended April 30,
(in thousands)20202019
Cost of revenue$1,233  $818  
Sales and marketing7,781  6,840  
Research and development3,943  2,572  
General and administrative4,415  2,986  
Total stock-based compensation expense$17,372  $13,216  
As of April 30, 2020, there was approximately $152.5 million of total unrecognized compensation cost related to unvested stock-based awards. This unrecognized compensation cost is expected to be recognized over an estimated remaining weighted-average vesting period of approximately 2.79 years. During the three months ended April 30, 2020, and 2019, the Company capitalized $0.2 million and $0.3 million, respectively, of stock-based compensation related to software development of additional functionality to the Yext platform.
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9. Equity
The following table summarizes the changes in stockholders' equity during the three months ended April 30, 2020:
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
(in thousands)SharesAmountCapitalLossDeficitStockEquity
Balance, January 31, 2020
115,830  $122  $636,008  $(360) $(422,653) $(11,905) $201,212  
Exercise of stock options391  1  1,895  —  —  —  1,896  
Vested restricted stock units converted to common shares903  1  (1) —  —  —    
Issuance of restricted stock26  —  —  —  —  —    
Issuance of common stock under employee stock purchase plan374  —  3,743  —  —  —  3,743  
Stock-based compensation—  —  17,617  —  —  —  17,617  
Other comprehensive loss—  —  —  (1,333) —  —  (1,333) 
Net loss—  —  —  —  (29,224) —  (29,224) 
Balance, April 30, 2020
117,524  $124  $659,262  $(1,693) $(451,877) $(11,905) $193,911  
The following table summarizes the changes in stockholders' equity during the three months ended April 30, 2019:
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
(in thousands)SharesAmountCapitalLossDeficitStockEquity
Balance, January 31, 2019
102,173  $109  $398,882  $(1,428) $(301,109) $(11,905) $84,549  
Common stock offering, net of issuance costs of $530
7,000  7  146,463  —  —  —  146,470  
Exercise of stock options1,096  1  4,995  —  —  —  4,996  
Vested restricted stock units converted to common shares557  —  —  —  —  —    
Issuance of restricted stock4  —  —  —  —  —    
Issuance of common stock under employee stock purchase plan170    3,283  —  —  —  3,283  
Stock-based compensation—  —  13,472  —  —  —  13,472  
Other comprehensive income—  —  —  349  —  —  349  
Net loss—  —  —  —  (18,959) —  (18,959) 
Balance, April 30, 2019
111,000  $117  $567,095  $(1,079) $(320,068) $(11,905) $234,160  
Common Stock Offering
On March 20, 2019, the Company closed a common stock offering, in which it issued and sold 7,000,000 shares of common stock, inclusive of the fully exercised underwriters’ option to purchase additional shares. The price per share to the public was $21.50. The Company received aggregate proceeds of $147.0 million from this offering, net of underwriters’ discounts and commissions, before deducting offering costs of approximately $0.5 million, which were recorded in additional paid in capital in its condensed consolidated statements of stockholders' 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
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stock, or delaying or preventing changes in control or management of the Company. As of April 30, 2020 and January 31, 2020, no shares of preferred stock were issued or outstanding.
Common Stock
        As of April 30, 2020 and January 31, 2020, 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 April 30, 2020 and January 31, 2020, the Company had 6,505,334 shares of treasury stock which are carried at its cost basis of $11.9 million on the Company's condensed consolidated balance sheets.
10. Debt
On March 16, 2016, the Company entered into a Loan and Security agreement with Silicon Valley Bank that provides for a $15.0 million revolving credit line ("Revolving Line") and a $7.0 million Letter of Credit facility (together with the Revolving Line, the "Credit Agreement"). In March 2018, the Credit Agreement was amended to extend the maturity date to March 16, 2020. On March 11, 2020, the Company replaced its existing Credit Agreement and entered into a new credit agreement with Silicon Valley Bank (the “March 2020 Credit Agreement”). No significant debt issuance costs were incurred in association with the March 2020 Credit Agreement.
The March 2020 Credit Agreement provides for a senior secured revolving loan facility of up to $50.0 million that matures three years after the effective date, with the right subject to certain conditions to add an incremental revolving loan facility of up to $50.0 million in the aggregate. The three-year revolving loan facility provides for borrowings up to the amount of the facility with sub-limits of up to (i) $30.0 million to be available for the issuance of letters of credit and (ii) $10.0 million to be available for swingline loans.
Under the March 2020 Credit Agreement, loans bear interest, at the Company's option, at an annual rate based on LIBOR or a base rate. Loans based on LIBOR shall bear interest at a rate between LIBOR plus 2.50% and LIBOR plus 3.00%, depending on the Company's average daily usage of the revolving loan facility. Loans based on the base rate shall bear interest at a rate between the base rate minus 0.50% and the base rate plus 0.00%, depending on the Company's average daily usage of the revolving loan facility.
The obligations under the March 2020 Credit Agreement are secured by a lien on substantially all of the tangible and intangible property of the Company and by a pledge of all of the equity interests of the Company's material direct and indirect domestic subsidiaries and 66% of each class of capital stock of any material first-tier foreign subsidiaries, subject to limited exceptions.
The March 2020 Credit Agreement contains customary affirmative and negative covenants and restrictions, as well as financial covenants that require the Company to maintain the year-over-year growth rate of its ordinary course recurring revenue for a trailing four fiscal quarter period above specified rates when certain liquidity thresholds are not met and to maintain a consolidated quick ratio of at least 1.50 to 1.00 tested on a monthly basis.
As of January 31, 2020, the Company had back-to-back standby letters of credit for $12.1 million, which were fully secured by a $12.1 million cash deposit and classified as restricted cash on the Company's condensed consolidated balance sheet. In connection with the March 2020 Credit Agreement, the $12.1 million cash deposit was released and is no longer classified as restricted cash on the Company's condensed consolidated balance sheet as of April 30, 2020.
        As of April 30, 2020, the Company was in compliance with all debt covenants. As of such date, the $50.0 million revolving loan facility had $30.4 million available and $19.6 million in letters of credit allocated as security in connection with office space.
11. Income Taxes
The Company calculates its year-to-date (provision for) benefit from income taxes by applying the estimated annual effective tax rate ("AETR") to year-to-date income or loss from operations before income taxes and adjusts for discrete tax items recorded in the period. During the three months ended April 30, 2020 and 2019, the Company recorded a (provision for) benefit from income taxes of $(0.3) million for each of the periods.
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The Company's effective tax rate generally differs from the U.S. federal statutory tax rate primarily due to a full valuation allowance related to the Company's U.S. deferred tax assets, partially offset by the foreign tax rate differential on non-U.S. income. The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance 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.
12. Leases
The Company's operating lease arrangements are principally for office space. As of April 30, 2020, the Company had $8.8 million of operating lease liabilities, current, $123.1 million of operating lease liabilities, non-current, $114.1 million of operating lease right-of-use assets, and no financing leases, on its condensed consolidated balance sheet. The operating lease arrangements included in the measurement of lease liabilities do not include short-term leases, and had a weighted-average remaining lease term of 9.8 years and a weighted-average discount rate of