0001614178-21-000211.txt : 20210903 0001614178-21-000211.hdr.sgml : 20210903 20210903163426 ACCESSION NUMBER: 0001614178-21-000211 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 70 CONFORMED PERIOD OF REPORT: 20210731 FILED AS OF DATE: 20210903 DATE AS OF CHANGE: 20210903 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: 211236997 BUSINESS ADDRESS: STREET 1: 61 NINTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10011 BUSINESS PHONE: 1-888-444-2988 MAIL ADDRESS: STREET 1: 61 NINTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10011 10-Q 1 yext-20210731.htm 10-Q yext-20210731
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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 July 31, 2021
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-20210731_g1.jpg
Delaware
20-8059722
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
61 Ninth Avenue
New York, NY 10011
(Address of principal executive offices, including zip code)
(212) 994-3900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.001 per share
YEXT
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller



reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
 ☐
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).    Yes    No  
As of August 23, 2021, the registrant had 127,845,122 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; 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)
July 31, 2021January 31, 2021
Assets
Current assets:
Cash and cash equivalents
$240,490 $230,411 
Accounts receivable, net of allowances of $2,786 and $2,528, respectively
59,110 97,455 
Prepaid expenses and other current assets
16,192 17,993 
Costs to obtain revenue contracts, current
33,428 30,325 
Total current assets
349,220 376,184 
Property and equipment, net
80,287 80,344 
Operating lease right-of-use assets
99,972 104,844 
Costs to obtain revenue contracts, non-current
27,916 22,692 
Goodwill
4,764 4,842 
Intangible assets, net
458 767 
Other long term assets
6,127 6,316 
Total assets
$568,744 $595,989 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities
$49,307 $54,186 
Unearned revenue, current
165,377 191,810 
Operating lease liabilities, current
14,191 14,165 
Total current liabilities
228,875 260,161 
Operating lease liabilities, non-current
117,689 123,584 
Other long term liabilities
5,601 5,009 
Total liabilities
352,165 388,754 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 50,000,000 shares authorized at July 31, 2021 and January 31, 2021; zero shares issued and outstanding at July 31, 2021 and January 31, 2021
  
Common stock, $0.001 par value per share; 500,000,000 shares authorized at July 31, 2021 and January 31, 2021; 134,305,353 and 130,494,513 shares issued at July 31, 2021 and January 31, 2021, respectively; 127,800,019 and 123,989,179 shares outstanding at July 31, 2021 and January 31, 2021, respectively
134 130 
Additional paid-in capital
788,149 733,933 
Accumulated other comprehensive income
2,769 2,422 
Accumulated deficit
(562,568)(517,345)
Treasury stock, at cost
(11,905)(11,905)
Total stockholders’ equity
216,579 207,235 
Total liabilities and stockholders’ equity
$568,744 $595,989 
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 July 31,Six months ended July 31,
2021202020212020
Revenue
$98,124 $88,055 $190,116 $173,406 
Cost of revenue
26,615 21,984 48,469 43,168 
Gross profit
71,509 66,071 141,647 130,238 
Operating expenses:
Sales and marketing
58,578 56,049 113,744 114,569 
Research and development
18,500 14,788 32,357 29,166 
General and administrative
20,843 19,474 39,190 39,932 
Total operating expenses
97,921 90,311 185,291 183,667 
Loss from operations
(26,412)(24,240)(43,644)(53,429)
Interest income
4 47 10 515 
Interest expense
(158)(154)(290)(291)
Other expense, net
(741)(423)(827)(507)
Loss from operations before income taxes
(27,307)(24,770)(44,751)(53,712)
(Provision for) benefit from income taxes
(285)(346)(472)(628)
Net loss
$(27,592)$(25,116)$(45,223)$(54,340)
Net loss per share attributable to common stockholders, basic and diluted
$(0.22)$(0.21)$(0.36)$(0.46)
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted
126,906,937 118,411,758 126,152,602 117,519,214 
Other comprehensive income (loss):
Foreign currency translation adjustment
$(8)$2,250 $347 $917 
Total comprehensive loss
$(27,600)$(22,866)$(44,876)$(53,423)
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’
SharesAmountCapitalIncome (Loss)DeficitStockEquity
Balance, January 31, 2020
115,830 $122 $636,008 $(360)$(422,653)$(11,905)$201,212 
Exercise of stock options3,064 3 16,513 — — — 16,516 
Vested restricted stock units converted to common shares4,358 4 (4)— — —  
Issuance of restricted stock38 — — — — —  
Issuance of common stock under employee stock purchase plan699 1 6,999 — — — 7,000 
Stock-based compensation— — 74,417 — — — 74,417 
Other comprehensive income— — — 2,782 — — 2,782 
Net loss— — — — (94,692)— (94,692)
Balance, January 31, 2021
123,989 130 733,933 2,422 (517,345)(11,905)207,235 
Exercise of stock options1,471 2 14,383 — — — 14,385 
Vested restricted stock units converted to common shares2,043 2 (2)— — —  
Issuance of restricted stock15 — — — — —  
Issuance of common stock under employee stock purchase plan282 — 3,817 — — — 3,817 
Stock-based compensation— — 36,018 — — — 36,018 
Other comprehensive income— — — 347 — — 347 
Net loss— — — — (45,223)— (45,223)
Balance, July 31, 2021
127,800 $134 $788,149 $2,769 $(562,568)$(11,905)$216,579 
See the accompanying notes to the condensed consolidated financial statements.

7


YEXT, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six months ended July 31,
20212020
Operating activities:
Net loss
$(45,223)$(54,340)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense
7,933 5,187 
Bad debt expense
909 2,316 
Stock-based compensation expense
35,000 34,602 
Amortization of operating lease right-of-use assets
4,619 6,827 
Other, net371 344 
Changes in operating assets and liabilities:
Accounts receivable
37,618 26,001 
Prepaid expenses and other current assets
1,681 (7,929)
Costs to obtain revenue contracts
(8,442)3,726 
Other long term assets
15 (1,191)
Accounts payable, accrued expenses and other current liabilities
(711)(7,010)
Unearned revenue
(26,337)(31,377)
Operating lease liabilities
(5,634)3,744 
Other long term liabilities
650 2,805 
Net cash provided by (used in) operating activities
2,449 (16,295)
Investing activities:
Capital expenditures
(10,555)(40,055)
Net cash used in investing activities
(10,555)(40,055)
Financing activities:
Proceeds from exercise of stock options
14,439 6,651 
Payments of deferred financing costs
(263)(654)
Proceeds, net from employee stock purchase plan withholdings
3,409 3,667 
Net cash provided by financing activities
17,585 9,664 
Effect of exchange rate changes on cash and cash equivalents
600 1,857 
Net increase (decrease) in cash and cash equivalents
10,079 (44,829)
Cash and cash equivalents at beginning of period
230,411 268,176 
Cash and cash equivalents at end of period
$240,490 $223,347 
See the accompanying notes to the condensed consolidated financial statements.
8


YEXT, INC.
Notes to Condensed Consolidated Financial Statements

1. Organization and Description of Business
Description of Business
Yext, Inc. ("Yext" or the "Company") organizes a business's facts so it can provide official answers to consumer questions starting with the business's own website and then extending across search engines and voice assistants. The Yext platform lets businesses structure the facts about their brands in a database called the Knowledge Graph. The platform is built to leverage the structured data stored in the Knowledge Graph to deliver a modern search experience on a business's or organization's own website, as well as across approximately 200 service and application providers, which the Company refers to as its Knowledge Network and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp. The Yext platform powers all of the Company's key features, including Listings, Pages, and Answers, along with its other features and capabilities.
Fiscal Year
The Company's fiscal year ends on January 31st. References to fiscal 2022, for example, are to the fiscal year ending January 31, 2022.
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, 2021, filed with the SEC on March 16, 2021 (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, 2021, 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 and six months ended July 31, 2021 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending January 31, 2022, or any other period.
There have been no material changes to the Company's significant accounting policies as described in the Form 10-K.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of those financial statements and the reported amounts of revenue and expense during the reporting period. These estimates include, but are not limited to, the standalone selling prices of performance obligations, the incremental borrowing rate associated with lease liabilities, the useful life of capitalized costs to obtain revenue contracts, income taxes, and the valuation and assumptions underlying stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could be material to the financial position and results of operations.
Segment Information
The Company is the provider of the Yext platform and operates as one operating segment. An operating segment is defined as a component of an enterprise for which separate financial information is evaluated regularly by the chief operating decision makers ("CODM"). The Company defines its CODM as its executive officers, and their role is to make decisions about allocating resources and assessing performance. The Company's business operates 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 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 July 31, 2021 and January 31, 2021, 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 and six months ended July 31, 2021 and 2020, respectively.
Recent Accounting Pronouncements
Adoption of Accounting Standard - 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. The Company adopted this standard on February 1, 2021 and it did not have a material impact 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 8% and 7% of the Company's total revenue for the six months ended July 31, 2021 and 2020, 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 July 31,Six months ended July 31,
(in thousands)2021202020212020
North America$77,639 $71,171 $150,699 $140,398 
International20,485 16,884 39,417 33,008 
Total revenue$98,124 $88,055 $190,116 $173,406 
North America revenue is predominantly 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 79% and 80% for the six months ended July 31, 2021 and 2020, respectively. Revenue attributable to England, which serves as the Company's main contracting entity for Europe effective February 1, 2021, represented 19% of total revenue for the six months ended July 31, 2021. Revenue attributable to Switzerland, which served as the Company's main contracting entity for Europe prior to February 1, 2021, represented 15% of total revenue for the six months ended July 31, 2020. No other individual country represented more than 10% of total revenue for the six months ended July 31, 2021 and 2020.
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 July 31, 2021, unearned revenue, current was $165.4 million, while unearned revenue, non-current, which is included within other long term liabilities on the Company's condensed consolidated balance sheet, was $0.2 million. Revenue recognized of $132.6 million during the six months ended July 31, 2021 was included in unearned revenue at the beginning of the period.
Customer deposits represent payments received in advance in instances where a revenue contract is cancelable in nature, and therefore the Company does not have an unconditional obligation to transfer control to a customer. As of July 31, 2021 and January 31, 2021, customer deposits of $0.7 million and $0.2 million were included in accounts payable, accrued expenses and other current liabilities on the Company's condensed consolidated balance sheet, respectively.
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Remaining Performance Obligations
The transaction price allocated to remaining performance obligations represents amounts under non-cancelable contracts expected to be recognized as revenue in future periods, and may be influenced by several factors, including seasonality, the timing of renewals, and contract terms. As of July 31, 2021, the Company had $341.6 million of remaining performance obligations, of which $323.8 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, 2021, the Company had $351.8 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 July 31, 2021 and January 31, 2021, the Company had money market funds included in cash and cash equivalents of $138.5 million and $138.8 million, respectively. These assets were valued using quoted market prices and were classified as Level 1 accordingly.
5. Goodwill and Intangible Assets
Goodwill
The Company had goodwill of $4.8 million as of both July 31, 2021 and January 31, 2021.
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 six months ended July 31, 2021 and 2020 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 July 31, 2021 and January 31, 2021, the Company had intangible assets, net of $0.5 million and $0.8 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 six months ended July 31, 2021 and 2020 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 $0.2 million and $0.3 million for the three and six months ended July 31, 2021, respectively and $0.1 million and $0.3 million for the three and six months ended July 31, 2020, respectively.
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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)July 31, 2021January 31, 2021
Computer software$18,528 $10,719 
Office equipment17,853 14,856 
Furniture and fixtures8,098 7,344 
Leasehold improvements 63,070 57,799 
Construction in progress313 4,469 
Software in progress596 5,754 
Total property and equipment, gross108,458 100,941 
Less: accumulated depreciation(28,171)(20,597)
Total property and equipment, net$80,287 $80,344 
As of July 31, 2021 and January 31, 2021, the Company's property and equipment, net attributable to the United States was 90% and 88%, respectively. No other individual country represented more than 10% of the total property and equipment, net as of those periods. Depreciation expense was $4.0 million and $7.6 million for the three and six months ended July 31, 2021, respectively and $3.0 million and $4.9 million for the three and six months ended July 31, 2020, respectively.
7. Accounts Payable, Accrued Expenses and Other Current Liabilities
        Accounts payable, accrued expenses and other current liabilities consisted of the following:
(in thousands)July 31, 2021January 31, 2021
Accounts payable$9,497 $12,974 
Accrued employee compensation17,423 16,780 
Accrued Knowledge Network application provider fees2,997 3,671 
Accrued professional services and associated costs2,820 2,202 
Accrued employee stock purchase plan withholdings liability2,821 3,230 
Other current liabilities13,749 15,329 
Total accounts payable, accrued expenses and other current liabilities$49,307 $54,186 
As of July 31, 2021 and January 31, 2021, capital expenditures of $0.7 million and $4.5 million were included in accounts payable, accrued expenses and other current liabilities, respectively.
8. Stock-Based Compensation
2008 Equity Incentive Plan
        The Company's 2008 Equity Incentive Plan (the "2008 Plan"), as amended on March 10, 2016, allowed for the issuance of up to 25,912,531 shares of common stock. Awards granted under the 2008 Plan may be incentive stock options ("ISOs"), nonqualified stock options ("NQSOs"), restricted stock and restricted stock units. The 2008 Plan is administered by the Company's Board of Directors, which determines the terms of the options granted, the exercise price, the number of shares subject to option and the option vesting period. No ISO or NQSO is exercisable after 10 years from the date of grant, and option awards will typically vest over a four-year period.
        The 2008 Plan was terminated in connection with the adoption of the Company's 2016 Equity Incentive Plan (the "2016 Plan") in December 2016, and since the 2008 Plan termination the Company has not granted and will not grant any additional awards under the 2008 Plan. However, the 2008 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder.
2016 Equity Incentive Plan
        In December 2016, the Company's Board of Directors adopted, and its stockholders approved, the 2016 Plan. The number of shares reserved for issuance under the 2016 Plan will increase on the first day of each fiscal year during the term of the 2016 Plan by the lesser of: (i) 10,000,000 shares, (ii) 4% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the Company's Board of Directors may determine. On February 1, 2021, the number of shares of common stock available for issuance under the 2016 Plan was automatically increased according to its terms by 4,959,567 shares. In addition, the shares reserved for issuance under the 2016 Plan also include shares returned to the 2008 Plan as the result of
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expiration or termination of options or other awards. As of July 31, 2021, the number of shares available for future award under the 2016 Plan is 2,703,984.
Stock Options
       The following table summarizes the activity related to the Company's stock options:
Outstanding Stock OptionsWeighted-Average Exercise PriceWeighted-Average Remaining Contractual Life (in years)Aggregate Intrinsic Value
(in thousands)
Balance, January 31, 2021
8,871,890 $7.64 4.94$81,906 
Granted $ 
Exercised(1,471,011)$9.78 
Forfeited or canceled(7,813)$6.80 
Balance, July 31, 2021
7,393,066 $7.21 4.81$43,098 
Vested and expected to vest7,322,361 $7.17 4.80$43,003 
Exercisable at July 31, 2021
7,035,440 $6.99 4.74$42,593 
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 July 31, 2021. 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 $9.7 million and $13.1 million for the six months ended July 31, 2021 and 2020, 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, 2021
9,545,352 $16.71 
Granted 5,443,718 $13.51 
Vested and converted to shares(2,067,646)$16.06 
Forfeited or canceled(1,679,439)$16.75 
Balance as of July 31, 2021
11,241,985 $15.27 
The estimated weighted-average grant date fair value of restricted stock and restricted stock units granted was $13.51 and $15.36 per share for the six months ended July 31, 2021 and 2020, respectively. The fair value of the common stock is the Company’s closing stock price as reported on the New York Stock Exchange.
Employee Stock Purchase Plan
In March 2017, the Company's Board of Directors adopted, and its stockholders approved, the 2017 Employee Stock Purchase Plan ("ESPP"), which became effective on the date it was adopted. The number of shares of the Company's common stock that will be available for sale to employees under the ESPP increases annually on the first day of each fiscal year in an amount equal to the lesser of: (i) 2,500,000 shares; (ii) 1% of the outstanding shares of the Company's common stock as of the last day of the immediately preceding fiscal year; or (iii) such other amount as the administrator may determine. On February 1, 2021, the number of shares of common stock available for issuance under the ESPP was automatically increased according to its terms by 1,239,891 shares. As of July 31, 2021, a total of 3,792,329 shares of the Company's common stock are available for sale to employees under the ESPP.
In connection with the offering period which ended on March 15, 2021, 282,119 shares of common stock were purchased under the ESPP at a purchase price of $13.53 per share for total proceeds of $3.8 million.
A new offering period began on March 15, 2021 and will end on September 15, 2021. As of July 31, 2021, 207,120 shares are estimated to be purchased at the end of the offering period and $2.8 million has been withheld on behalf of employees for these future purchases under the ESPP and is included in accounts payable, accrued expenses and other current liabilities.
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The Black-Scholes option pricing model assumptions estimated at the commencement of the new offering period and used to calculate the fair value of shares to be purchased during an ESPP offering period included expected lives of 0.5 years, expected volatility of 59.24% and 51.44%, and risk-free rates of 0.06% and 0.29%, for the six months ended July 31, 2021 and 2020, respectively.
The expected life assumptions were based on each offering period's respective purchase date. The Company estimated the expected volatility assumption based on the historical volatility of its stock price. The risk-free rate assumptions were based on the U.S. treasury yield curve in effect at commencement of the offering period. The dividend yield assumption was zero as the Company has not historically paid any dividends and does not expect to declare or pay any dividends in the foreseeable future.
During the three and six months ended July 31, 2021, the Company recorded stock-based compensation expense associated with the ESPP of $0.5 million and $1.1 million, respectively and $0.6 million and $1.2 million for the three and six months ended July 31, 2020, respectively. As of July 31, 2021, total unrecognized compensation cost related to ESPP was $0.3 million, net of estimated forfeitures, which will be amortized over a weighted-average remaining period of 0.13 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, net of estimated forfeitures, over the vesting period of the applicable award using the straight-line method.
The Company's stock-based compensation expense for the periods presented was as follows:
Three months ended July 31,Six months ended July 31,
(in thousands)2021202020212020
Cost of revenue$2,312 $1,307 $3,757 $2,540 
Sales and marketing7,377 7,960 12,878 15,741 
Research and development5,828 3,933 9,816 7,876 
General and administrative4,885 4,030 8,549 8,445 
Total stock-based compensation expense$20,402 $17,230 $35,000 $34,602 
As of July 31, 2021, there was approximately $162.8 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 2.78 years. During the three and six months ended July 31, 2021, the Company capitalized $0.3 million and $1.0 million, respectively of stock-based compensation related to software development, and $0.5 million and $0.8 million for the three and six months ended July 31, 2020.












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9. Equity
The following table summarizes the changes in stockholders' equity during the three and six months ended July 31, 2021:
Accumulated
AdditionalOtherTotal
Common StockPaid-InComprehensiveAccumulatedTreasuryStockholders’
(in thousands)SharesAmountCapitalIncomeDeficitStockEquity
Balance, January 31, 2021
123,989 $130 $733,933 $2,422 $(517,345)$(11,905)$207,235 
Exercise of stock options1,069 1 12,110 — — — 12,111 
Vested restricted stock units converted to common shares871 1 (1)— — —  
Issuance of restricted stock4 — — — — —  
Issuance of common stock under employee stock purchase plan282 — 3,817 — — — 3,817 
Stock-based compensation— — 15,288 — — — 15,288 
Other comprehensive income— — — 355 — — 355 
Net loss— — — — (17,631)— (17,631)
Balance, April 30, 2021
126,215 132 765,147 2,777 (534,976)(11,905)221,175 
Exercise of stock options402 1 2,273 — — — 2,274 
Vested restricted stock units converted to common shares1,172 1 (1)— — —  
Issuance of restricted stock11 — — — — —  
Stock-based compensation— — 20,730 — — — 20,730 
Other comprehensive loss— — — (8)— — (8)
Net loss— — — — (27,592)— (27,592)
Balance, July 31, 2021
127,800 $134 $788,149 $2,769 $(562,568)$(11,905)$216,579 
The following table summarizes the changes in stockholders' equity during the three and six months ended July 31, 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 
Exercise of stock options935 1 4,750 — — — 4,751 
Vested restricted stock units converted to common shares1,041 1 (1)— — —  
Issuance of restricted stock12 — — — — —  
Stock-based compensation— — 17,752 — — — 17,752 
Other comprehensive income— — — 2,250 — — 2,250 
Net loss— — — — (25,116)— (25,116)
Balance, July 31, 2020
119,512 $126 $681,763 $557 $(476,993)$(11,905)$193,548 


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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 July 31, 2021 and January 31, 2021, no shares of preferred stock were issued or outstanding.
Common Stock
        As of July 31, 2021 and January 31, 2021, 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 July 31, 2021 and January 31, 2021, 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 11, 2020, the Company entered into a new credit agreement with Silicon Valley Bank (the “Credit Agreement”). No significant debt issuance costs were incurred in association with the Credit Agreement. In January 2021, the Company amended the Credit Agreement which modified the conditions pursuant to which subsidiaries are required to become guarantors.
The Credit Agreement provides for a senior secured revolving loan facility of up to $50.0 million that matures three years after the effective date, with the right subject to certain conditions to add an incremental revolving loan facility of up to $50.0 million in the aggregate. The three year revolving loan facility provides for borrowings up to the amount of the facility with sub-limits of up to (i) $30.0 million to be available for the issuance of letters of credit and (ii) $10.0 million to be available for swingline loans.
Under the Credit Agreement, loans bear interest, at the Company's option, at an annual rate based on LIBOR or a base rate. Loans based on LIBOR shall bear interest at a rate between LIBOR plus 2.50% and LIBOR plus 3.00%, depending on the Company's average daily usage of the revolving loan facility. Loans based on the base rate shall bear interest at a rate between the base rate minus 0.50% and the base rate plus 0.00%, depending on the Company's average daily usage of the revolving loan facility.
The obligations under the Credit Agreement are secured by a lien on substantially all of the tangible and intangible property of the Company and by a pledge of all of the equity interests of the Company's material direct and indirect domestic subsidiaries and 66% of each class of capital stock of any material first-tier foreign subsidiaries, subject to limited exceptions.
The Credit Agreement contains customary affirmative and negative covenants and restrictions, as well as financial covenants that require the Company to maintain the year-over-year growth rate of its ordinary course recurring revenue for a trailing four fiscal quarter period above specified rates when certain liquidity thresholds are not met and to maintain a consolidated quick ratio of at least 1.50 to 1.00 tested on a monthly basis.
        As of July 31, 2021, the Company was in compliance with all debt covenants. As of such date, the $50.0 million revolving loan facility had $35.7 million available and $14.3 million in letters of credit allocated as security in connection with office space.
11. Income Taxes
The Company calculates its year-to-date (provision for) benefit from income taxes by applying the estimated annual effective tax rate ("AETR") to year-to-date income or loss from operations before income taxes and adjusts for discrete tax items recorded in the period. During the three and six months ended July 31, 2021, the Company recorded a (provision for) benefit from income taxes of $(0.3) million and $(0.5) million, respectively. During the three and six months ended July 31, 2020, the Company recorded a (provision for) benefit from income taxes of $(0.3) million and $(0.6) million, respectively.
The Company's effective tax rate generally differs from the U.S. federal statutory tax rate primarily due to a full valuation allowance related to the Company's net deferred tax assets in the U.S. and in certain foreign jurisdictions, partially offset by the
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foreign tax rate differential on non-U.S. income. The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance on a jurisdictional basis if it is more likely than not that some or all the deferred tax assets will not be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, loss carryback and tax-planning strategies. Generally, more weight is given to objectively verifiable evidence, such as the cumulative loss in recent years, as a significant piece of negative evidence to overcome. To the extent sufficient positive evidence becomes available, a portion of the valuation allowance against certain net deferred tax assets could be released in the future and would result in a non-cash income tax benefit in the period of release.
12. Leases
The Company's operating lease arrangements are principally for office space. As of July 31, 2021, the Company had $14.2 million of operating lease liabilities, current, $117.7 million of operating lease liabilities, non-current, $100.0 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 9.1 years and a weighted-average discount rate of 5.8%, as of July 31, 2021. During the six months ended July 31, 2021, the Company paid $9.5 million for amounts included in the measurement of lease liabilities and did not enter into any new lease arrangements.
During the six months ended July 31, 2021 and 2020, the Company recognized $13.3 million and $13.1 million, of lease expense, respectively, which consisted of the following:
Six months ended July 31,
(in thousands)20212020
Operating lease expense$8,502 $10,944 
Short-term lease expense379 784 
Variable lease expense4,408 1,338 
Total lease expense$13,289 $13,066 
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 consists of real estate taxes and utilities, among other office space related expenses. For the six months ended July 31, 2021, variable lease expense reflected the increased costs of the Company's use of its new office spaces, as well as certain associated real estate taxes.
13. Commitments and Contingencies
Contractual Obligations
The Company is obligated to make payments under certain non-cancelable contractual obligations in the normal course of business. The Company's contractual obligations primarily relate to its operating lease arrangements for office space. Its other contractual obligations include contracts with its Knowledge Network application providers, which generally have a term of one year, although some have a term of several years, and its software vendors, among others. These obligations represent minimum contractual payments, or the Company's best estimate for variable elements based on historical payments. The Company's contractual obligations have various expiry dates between fiscal years 2022 and 2035.
        As of July 31, 2021, the Company's contractual obligations are as follows (in thousands):
Fiscal year ending January 31:Operating LeasesOther
2022 (remainder of fiscal year)
$9,726 $15,275 
202319,147 12,304 
202418,849 5,931 
202518,295 1,939 
202618,991 1,840 
2027 and thereafter92,759 1,939 
Total$177,767 $39,228 
Performance and Payment Bond
The Company's operating lease arrangement associated with its new corporate headquarters in New York, NY required performance and payment bonds to secure the completion of certain construction work. The Company was not required to pay any amounts associated with non-performance or non-payment related to the bonds.
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Legal Proceedings
       The Company is and may be involved in various legal proceedings arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, currently, in the opinion of the Company, the likelihood of any material adverse impact on the Company's results of operations, cash flows or the Company's financial position for any such litigation or claims is deemed to be remote. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors.
Warranties and Indemnifications
The Yext platform is in some cases warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company's product specifications.
The Company's arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third-party's intellectual property rights and/or if the Company breaches its contractual agreements with a customer or in instances of negligence, fraud or willful misconduct by the Company. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the accompanying condensed consolidated financial statements.
The Company has also agreed to indemnify certain of its directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person's service as a director or officer, including any action by the Company, arising out of that person's services as the Company's director or officer or that person's services provided to any other company or enterprise at the Company's request. The Company maintains director and officer insurance coverage that would generally enable the Company to recover a portion of future amounts paid. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions.
14. Net Loss Per Share Attributable to Common Stockholders
The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders:
Three months ended July 31,Six months ended July 31,
(in thousands, except share and per share data)2021202020212020
Numerator:
     Net loss attributable to common stockholders$(27,592)$(25,116)$(45,223)$(54,340)
Denominator:
     Weighted-average common shares outstanding126,906,937118,411,758126,152,602117,519,214
Net loss per share attributable to common stockholders, basic and diluted$(0.22)$(0.21)$(0.36)$(0.46)
        Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Unvested restricted stock and restricted stock units are excluded from the denominator of basic net loss per share. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares plus common equivalent shares for the period, including any dilutive effect from such shares.
        Since the Company was in a net loss position for all periods presented, net loss per share attributable to common stockholders was the same on a basic and diluted basis, as the inclusion of all potential common equivalent shares outstanding would have been anti-dilutive. Anti-dilutive common equivalent shares were as follows:
As of July 31,
20212020
Options to purchase common stock7,393,066 10,952,041 
Restricted stock and restricted stock units11,241,985 9,998,039 
Shares estimated to be purchased under ESPP207,120 336,113 
Total anti-dilutive common equivalent shares18,842,171 21,286,193 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended January 31, 2021, filed with the SEC on March 16, 2021. As discussed in the section titled "Special Note Regarding Forward Looking Statements," the following discussion and analysis contains forward looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section titled "Risk Factors" under Part II, Item 1A in this Quarterly Report on Form 10-Q.
Overview
Yext organizes a business's facts so it can provide official answers to consumer questions starting with the business's own website and then extending across search engines and voice assistants. Our platform lets businesses structure the facts about their brands in a database called the Knowledge Graph. Our platform is built to leverage the structured data stored in the Knowledge Graph to deliver a modern search experience on a business's or organization's own website, as well as across approximately 200 service and application providers, which we refer to as our Knowledge Network and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp. Our platform powers all of our key features, including Listings, Pages, and Answers, along with its other features and capabilities.
We sell our platform throughout the world to customers of all sizes, including our enterprise, mid-size, and third-party reseller customers. In transactions with resellers, we are only party to the transaction with the reseller and are not a party to the reseller's transaction with its customer.
Revenue is a function of the number of customers, the number of licenses with each customer, the package to which each customer subscribes, the price of the package and renewal rates. We offer subscriptions in a discrete range of packages, with pricing based on specified feature sets and the number of licenses managed by the customer as well as on a capacity-basis.
Fiscal Year
Our fiscal year ends on January 31st. References to fiscal 2022, for example, are to the fiscal year ending January 31, 2022.
COVID-19 Update
The COVID-19 pandemic has disrupted business operations for us and our customers, as well as suppliers, and other parties with whom we do business. Such disruptions are expected to continue for an indefinite period of time.
We have adopted several measures in response to the COVID-19 pandemic and continue to monitor regional developments to inform our operational decisions. We have begun voluntary phased re-openings in our offices in accordance with guidance provided by government agencies, although currently the majority of our employees are still working remotely. Non-essential business travel remains restricted, and while we continue to hold virtual events, we have also resumed in-person marketing events. The uncertain duration of these measures have had and may continue to have negative effects on our sales efforts and revenue growth rates. We continue to be committed to our business, the strength of our platform, our ability to continue to execute on our strategy, and our efforts to support our customers.
We may continue to see some existing and potential customers, in particular customers in industries that have been highly impacted by the pandemic such as retail and food services, as well as certain geographies such as Europe, reduce, suspend or delay technology spending; request to renegotiate contracts to obtain concessions such as, extended billing and payment terms; shorten the duration of contracts; or elect not to renew their subscriptions which could materially adversely impact our business, financial condition and results of operations in future periods. The ultimate extent of the impact of the pandemic will depend on future developments, which continue to be highly uncertain and cannot be predicted, including the severity and duration of the COVID-19 pandemic and the actions taken to contain and address its impact, among others. However, because we generally recognize revenue from our customer contracts ratably over the term of the contract, changes in our contracting activity in the near term may not be fully reflected in our results of operations and overall financial performance until future periods. See Part II Item 1A “Risk Factors” for further discussion of the possible impact of the COVID-19 pandemic on our business.
Components of Results of Operations
Revenue
We derive our revenue primarily from subscription and associated support to our Yext platform. Our contracts are typically one year in length, but may be up to three years or longer in length. Revenue is a function of the number of customers, the number of licenses or capacity purchased by each customer, the package to which each customer subscribes, the price of the package and renewal rates. Revenue is generally recognized ratably over the contract term beginning on the commencement date of each contract, which is the date our platform is made available to customers. At the beginning of each subscription term we invoice our customers, typically
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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 unearned revenue. Unearned revenue is subsequently recognized as revenue when transfer of control to a customer has occurred.
Cost of Revenue
Cost of revenue consists primarily of employee-related costs, including personnel-related costs, which mainly consist of salaries and wages, and stock-based compensation expense. Cost of revenue also includes fees associated with our Knowledge Network application provider arrangements, the nature of which may be unpaid, fixed, or variable, and are unpaid with many of our larger providers, as well as the costs associated with our data centers. In addition, cost of revenue includes depreciation expense, including with respect to certain capitalized software development costs incurred in connection with additional functionality to our platform. Cost of revenue also includes operating and short-term lease expenses associated with our office spaces, which are allocated based on employee headcount. In addition, cost of revenue includes software expense, which relates to licenses, professional services, and other costs associated with software for use in the operations of our business, which is also allocated based on employee headcount.
Operating Expenses
Sales and marketing expenses. Sales and marketing expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense. Personnel-related costs mainly consist of salaries and wages and costs of obtaining revenue contracts. Sales and marketing expenses also include operating and short-term lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount. In addition, sales and marketing expenses include costs related to advertising and conferences and brand awareness events.
Research and development expenses. Research and development expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense. Personnel-related costs mainly consist of salaries and wages. Capitalized software development costs related to additional functionality to our platform are excluded from research and development expenses as they are capitalized as a component of property and equipment, net and depreciated to cost of revenue over the term of their useful life. Research and development expenses also include operating and short-term lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount.
General and administrative expenses. General and administrative expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense for our finance and accounting, human resources, information technology and legal support departments. Personnel-related costs mainly consist of salaries and wages. General and administrative expenses also include operating and short-term lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount, and other professional related costs.
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Results of Operations
The following table sets forth selected condensed consolidated statement of operations data for each of the periods indicated:
Three months ended July 31,Six months ended July 31,
(in thousands)2021202020212020
Revenue
$98,124 $88,055 $190,116 $173,406 
Cost of revenue(1)
26,615 21,984 48,469 43,168 
 Gross profit
71,509 66,071 141,647 130,238 
Operating expenses:
 Sales and marketing(1)
58,578 56,049 113,744 114,569 
 Research and development(1)
18,500 14,788 32,357 29,166 
 General and administrative(1)
20,843 19,474 39,190 39,932 
 Total operating expenses
97,921 90,311 185,291 183,667 
Loss from operations(26,412)(24,240)(43,644)(53,429)
Interest income47 10 515 
Interest expense(158)(154)(290)(291)
Other expense, net(741)(423)(827)