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, 2024

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)

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 21, 2024, the registrant had 127,920,766 shares of common stock, $0.001 par value per share outstanding.

TABLE OF CONTENTS

			PAGE
PART I.		FINANCIAL INFORMATION
	Item 1	Financial Statements	6
		Condensed Consolidated Balance Sheets (Unaudited)	6
		Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)	7
		Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	8
		Condensed Consolidated Statements of Cash Flows (Unaudited)	10
		Notes to Condensed Consolidated Financial Statements	11
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	32
	Item 4	Controls and Procedures	33
PART II.		OTHER INFORMATION
	Item 1	Legal Proceedings	34
	Item 1A	Risk Factors	34
	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	60
	Item 3	Defaults Upon Senior Securities	60
	Item 4	Mine Safety Disclosures	60
	Item 5	Other Information	60
	Item 6	Exhibits	61
SIGNATURES

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,” “possible,” 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 general macroeconomic conditions, including, but not limited to, the impact of foreign currency fluctuations, interest rates, inflation, recession risks and public health emergencies, such as the coronavirus (“COVID-19”) pandemic, on our business, operations, and financial results and the business and operations of our customers and potential customers;

•our beliefs, objectives and strategies for future operations, including plans to invest in international expansion, research and development, and our sales and marketing teams, and the impact of such investments on our operations;

•changes in management and anticipated effects thereof;

•effects of current and prospective acquisitions and the integration thereof, including that of our recent acquisition of Hearsay Social, Inc. (“Hearsay”);

•our ability to increase sales of our products;

•maintaining and expanding our end-customer base and our relationships with our Publisher 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.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these 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.

4

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.

5

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, 2024		January 31, 2024
Assets
Current assets:
Cash and cash equivalents	$	234,823	$	210,184
Accounts receivable, net of allowances of $926 and $1,013, respectively	45,870		108,198
Prepaid expenses and other current assets	18,312		14,849
Costs to obtain revenue contracts, current	23,048		26,680
Total current assets	322,053		359,911
Property and equipment, net	44,037		48,542
Operating lease right-of-use assets	71,872		75,989
Costs to obtain revenue contracts, non-current	12,793		16,710
Goodwill	4,478		4,478
Intangible assets, net	156		168
Other long term assets	2,815		3,012
Total assets	$	458,204	$	508,810
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable, accrued expenses and other current liabilities	$	33,740	$	38,766
Unearned revenue, current	156,194		212,210
Operating lease liabilities, current	17,574		16,798
Total current liabilities	207,508		267,774
Operating lease liabilities, non-current	83,201		89,562
Other long term liabilities	4,692		4,300
Total liabilities	295,401		361,636
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 50,000,000 shares authorized at July 31, 2024 and January 31, 2024; zero shares issued and outstanding at July 31, 2024 and January 31, 2024	—		—
Common stock, $0.001 par value per share; 500,000,000 shares authorized at July 31, 2024 and January 31, 2024; 150,518,464 and 148,197,347 shares issued at July 31, 2024 and January 31, 2024, respectively; 127,144,940 and 124,867,093 shares outstanding at July 31, 2024 and January 31, 2024, respectively	150		148
Additional paid-in capital	966,550		942,622
Accumulated other comprehensive loss	(4,359)		(4,183)
Accumulated deficit	(687,046)		(679,172)
Treasury stock, at cost	(112,492)		(112,241)
Total stockholders’ equity	162,803		147,174
Total liabilities and stockholders’ equity	$	458,204	$	508,810

See the accompanying notes to the condensed consolidated financial statements.

6

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,
	2024		2023		2024		2023
Revenue	$	97,887	$	102,598	$	193,877	$	202,051
Cost of revenue	22,293		22,393		43,839		43,743
Gross profit	75,594		80,205		150,038		158,308
Operating expenses:
Sales and marketing	41,957		47,591		85,211		91,587
Research and development	18,580		18,890		35,639		35,643
General and administrative	22,623		17,955		42,180		36,541
Total operating expenses	83,160		84,436		163,030		163,771
Loss from operations	(7,566)		(4,231)		(12,992)		(5,463)
Interest income	2,395		1,840		4,755		3,374
Interest expense	(124)		(88)		(516)		(161)
Other expense, net	(204)		(297)		(342)		(617)
Loss from operations before income taxes	(5,499)		(2,776)		(9,095)		(2,867)
Benefit from (provision for) income taxes	1,442		(661)		1,221		(982)
Net loss	$	(4,057)	$	(3,437)	$	(7,874)	$	(3,849)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.03)	$	(0.03)	$	(0.06)	$	(0.03)
Weighted-average number of shares used in computing net loss per share attributable to common stockholders, basic and diluted	126,535,481		124,358,526		125,967,631		123,821,653
Other comprehensive (loss) income:
Foreign currency translation adjustment	$	237	$	(196)	$	(180)	$	154
Unrealized gain (loss) on marketable securities, net	12		(8)		4		(12)
Total comprehensive loss	$	(3,808)	$	(3,641)	$	(8,050)	$	(3,707)

See the accompanying notes to the condensed consolidated financial statements.

7

YEXT, INC.

Condensed Consolidated Statements of Stockholders' Equity

(In thousands)

(Unaudited)

Three Months Ended July 31, 2024

						Accumulated
				Additional		Other						Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Treasury		Stockholders’
	Shares	Amount		Capital		Loss		Deficit		Stock		Equity
Balance, April 30, 2024	126,129	$	149	$	955,363	$	(4,608)	$	(682,989)	$	(112,241)	$	155,674
Exercise of stock options	166	—		508		—		—		—		508
Vested restricted stock units converted to common shares, net of shares withheld for employee taxes	775	1		(1,741)		—		—		—		(1,740)
Issuance of restricted stock	118	—		—		—		—		—		—
Stock-based compensation	—	—		12,420		—		—		—		12,420
Repurchase of common stock	(43)	—		—		—		—		(251)		(251)
Other comprehensive income	—	—		—		249		—		—		249
Net loss	—	—		—		—		(4,057)		—		(4,057)
Balance, July 31, 2024	127,145	$	150	$	966,550	$	(4,359)	$	(687,046)	$	(112,492)	$	162,803

Three Months Ended July 31, 2023

						Accumulated
				Additional		Other						Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Treasury		Stockholders’
	Shares	Amount		Capital		Loss		Deficit		Stock		Equity
Balance, April 30, 2023	124,214	$	145	$	914,608	$	(3,271)	$	(676,954)	$	(93,941)	$	140,587
Exercise of stock options	258	—		1,339		—		—		—		1,339
Vested restricted stock units converted to common shares, net of shares withheld for employee taxes	782	1		(4,513)		—		—		—		(4,512)
Issuance of restricted stock	62	—		—		—		—		—		—
Stock-based compensation	—	—		11,660		—		—		—		11,660
Repurchase of common stock	(662)	—		—		—		—		(6,412)		(6,412)
Other comprehensive loss	—	—		—		(204)		—		—		(204)
Net loss	—	—		—		—		(3,437)		—		(3,437)
Balance, July 31, 2023	124,654	$	146	$	923,094	$	(3,475)	$	(680,391)	$	(100,353)	$	139,021

See the accompanying notes to the condensed consolidated financial statements.

8

YEXT, INC.

Condensed Consolidated Statements of Stockholders' Equity

(In thousands)

(Unaudited)

Six Months Ended July 31, 2024

						Accumulated
				Additional		Other						Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Treasury		Stockholders’
	Shares	Amount		Capital		Loss		Deficit		Stock		Equity
Balance, January 31, 2024	124,867	$	148	$	942,622	$	(4,183)	$	(679,172)	$	(112,241)	$	147,174
Exercise of stock options	259	—		791		—		—		—		791
Vested restricted stock units converted to common shares, net of shares withheld for employee taxes	1,411	2		(3,788)		—		—		—		(3,786)
Issuance of restricted stock	138	—		—		—		—		—		—
Issuance of common stock under employee stock purchase plan	513	—		2,351		—		—		—		2,351
Stock-based compensation	—	—		24,574		—		—		—		24,574
Repurchase of common stock	(43)	—		—		—		—		(251)		(251)
Other comprehensive loss	—	—		—		(176)		—		—		(176)
Net loss	—	—		—		—		(7,874)		—		(7,874)
Balance, July 31, 2024	127,145	$	150	$	966,550	$	(4,359)	$	(687,046)	$	(112,492)	$	162,803

Six Months Ended July 31, 2023

						Accumulated
				Additional		Other						Total
	Common Stock			Paid-In		Comprehensive		Accumulated		Treasury		Stockholders’
	Shares	Amount		Capital		Loss		Deficit		Stock		Deficit
Balance, January 31, 2023	122,335	$	142	$	897,368	$	(3,617)	$	(676,542)	$	(89,328)	$	128,023
Exercise of stock options	1,514	1		8,582		—		—		—		8,583
Vested restricted stock units converted to common shares, net of shares withheld for employee taxes	1,464	2		(7,754)		—		—		—		(7,752)
Issuance of restricted stock	75	—		—		—		—		—		—
Issuance of common stock under employee stock purchase plan	492	1		2,119		—		—		—		2,120
Stock-based compensation	—	—		22,779		—		—		—		22,779
Repurchase of common stock	(1,226)	—		—		—		—		(11,025)		(11,025)
Other comprehensive income	—	—		—		142		—		—		142
Net loss	—	—		—		—		(3,849)		—		(3,849)
Balance, July 31, 2023	124,654	$	146	$	923,094	$	(3,475)	$	(680,391)	$	(100,353)	$	139,021

See the accompanying notes to the condensed consolidated financial statements.

9

YEXT, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Six months ended July 31,
	2024		2023
Operating activities:
Net loss	$	(7,874)	$	(3,849)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization expense	5,814		9,089
Bad debt expense	363		602
Stock-based compensation expense	24,398		22,577
Amortization of operating lease right-of-use assets	4,265		4,611
Other, net	481		184
Changes in operating assets and liabilities:
Accounts receivable	62,021		54,943
Prepaid expenses and other current assets	(3,231)		(538)
Costs to obtain revenue contracts	7,619		6,554
Other long term assets	215		726
Accounts payable, accrued expenses and other current liabilities	(4,649)		(14,158)
Unearned revenue	(56,370)		(55,324)
Operating lease liabilities	(5,742)		(5,848)
Other long term liabilities	350		141
Net cash provided by operating activities	27,660		19,710
Investing activities:
Capital expenditures	(1,192)		(1,567)
Net cash used in investing activities	(1,192)		(1,567)
Financing activities:
Proceeds from exercise of stock options	791		8,610
Repurchase of common stock	(201)		(10,996)
Payments for taxes related to net share settlement of stock-based compensation awards	(3,781)		(7,750)
Payments of deferred financing costs	(659)		(301)
Proceeds, net from employee stock purchase plan withholdings	1,842		2,176
Net cash used in financing activities	(2,008)		(8,261)
Effect of exchange rate changes on cash and cash equivalents	179		431
Net increase in cash and cash equivalents	24,639		10,313
Cash and cash equivalents at beginning of period	210,184		190,214
Cash and cash equivalents at end of period	$	234,823	$	200,527

See the accompanying notes to the condensed consolidated financial statements.

10

YEXT, INC.

Notes to Condensed Consolidated Financial Statements

1. Organization and Description of Business

Description of Business

Yext, Inc. ("Yext" or the "Company") empowers businesses to manage their knowledge so they can deliver relevant, actionable answers to consumer questions as well as consistent, accurate and engaging experiences to customers throughout the digital ecosystem. The Company's digital presence platform (also known as the Answers Platform) lets businesses structure and organize information about their brands in the Company's knowledge graph, Yext Content (also known as the Knowledge Graph), which is then delivered across first- and third-party websites and applications through its network of over 200 service and application providers, which the Company refers to as its Publisher Network. The Company's platform powers all of the Company's key products, including Listings, Reviews, Pages, and Search, each with robust analytics capabilities for businesses to easily track performance across customer experiences.

Fiscal Year

The Company's fiscal year ends on January 31st. References to fiscal 2025, for example, are to the fiscal year ending January 31, 2025.

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, 2024, filed with the SEC on March 13, 2024 (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, 2024, 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 six months ended July 31, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter, the fiscal year ending January 31, 2025, 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 platform and operates as one operating segment. An operating segment is defined as a component of an enterprise for which separate financial information is evaluated regularly by the chief operating decision makers ("CODM"). The Company defines its CODM as its executive officers, and their role is to make decisions about allocating resources and assessing performance. The Company's business operates as one operating segment as all of the Company's offerings operate on the Company's platform and are deployed in an identical way, with its CODM evaluating the Company's financial information, resources and performance of these resources on a consolidated basis. Since the Company operates as one operating segment, all required financial segment information can be found in the condensed consolidated financial statements.

11

Recent Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The updated standard is effective for the Company's annual periods beginning in fiscal 2025 and interim periods beginning in the first quarter of fiscal 2026. Early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning in fiscal 2026, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2023-09.

3. Revenue

Performance Obligations

The Company has identified that it has two distinct performance obligations: subscription and associated support to the Company's platform and professional services. The Company's revenue is predominately related to its subscription and associated support to the Company's platform. Professional services revenue accounted for approximately 7% and 8% of the Company's total revenue for the six months ended July 31, 2024 and 2023, 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)	2024		2023		2024		2023
North America	$	76,823	$	80,819	$	152,180	$	159,319
International	21,064		21,779		41,697		42,732
Total revenue	$	97,887	$	102,598	$	193,877	$	202,051

North America revenue is attributable to the United States. International revenue is predominantly attributable to European countries, but also includes Japan.

The Company's revenue attributable to the United States represented 78% of total revenue, revenue attributable to the United Kingdom, which serves as the Company's main contracting entity for Europe, represented 20% of total revenue, and no other individual country represented more than 10% of total revenue for the six months ended July 31, 2024.

The Company's revenue attributable to the United States represented 79% of total revenue, revenue attributable to the United Kingdom, which serves as the Company's main contracting entity for Europe, represented 20% of total revenue, and no other individual country represented more than 10% of total revenue for the six months ended July 31, 2023.

Contract Assets

The Company records a contract asset when revenue is recognized prior to being billed. Contract assets were $1.0 million as of July 31, 2024 and were not significant as of January 31, 2024. Contract assets are included in prepaid expenses and other current assets on the condensed consolidated balance sheet.

Contract Liabilities

A contract liability is an obligation to transfer goods or services for which consideration has been received or is due to a customer. The Company's contract liabilities consist primarily of unearned revenue and, to a lesser extent, customer deposits.

As of July 31, 2024, unearned revenue, current was $156.2 million, while unearned revenue, non-current, which is included within other long term liabilities on the Company's condensed consolidated balance sheet, was $0.8 million. Revenue recognized of $144.2 million during the six months ended July 31, 2024 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, 2024 and January 31, 2024, customer deposits of $1.0 million and $0.2 million are included in accounts payable, accrued expenses and other current liabilities on the Company's condensed consolidated balance sheet, respectively.

12

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, 2024, the Company had $396.5 million of remaining performance obligations, of which $349.4 million is expected to be recognized as revenue over the next twenty-four months, with the remaining balance expected to be recognized thereafter. As of January 31, 2024, the Company had $465.1 million of remaining performance obligations.

4. Investments in Marketable Securities

The following tables summarize the Company's investments in marketable securities:

	July 31, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Money market funds	$	415	$	—	$	—	$	415
U.S. treasury securities	44,150		—		(2)		44,148
Total marketable securities	$	44,565	$	—	$	(2)	$	44,563
	January 31, 2024
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Money market funds	$	63,966	$	—	$	—	$	63,966
U.S. treasury securities	82,642		—		(7)		82,635
Total marketable securities	$	146,608	$	—	$	(7)	$	146,601

As of July 31, 2024 and January 31, 2024, the Company's marketable securities have a maturity of 90 days or less and are classified as cash and cash equivalents. During the six months ended July 31, 2024 and 2023, the Company had no material reclassification adjustments from accumulated other comprehensive loss to net loss.

The Company classifies interest income on investments in marketable securities, amortization of premiums and discounts, and realized gains and losses on securities available for sale within interest income in the condensed consolidated statements of operations and comprehensive loss.

The Company regularly reviews its debt securities and monitors the surrounding economic conditions to assess the risk of expected credit losses. As of July 31, 2024 and January 31, 2024, the unrealized losses and the related risk of expected credit losses were not significant.

5. 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.

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The Company's assets measured at fair value on a recurring basis, by level, within the fair value hierarchy are as follows:

	July 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	415	$	—	$	—	$	415
U.S. treasury securities	—		44,148		—		44,148
Included in cash and cash equivalents	$	415	$	44,148	$	—	$	44,563
	January 31, 2024
(in thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	63,966	$	—	$	—	$	63,966
U.S. treasury securities	—		82,635		—		82,635
Included in cash and cash equivalents	$	63,966	$	82,635	$	—	$	146,601

The Company’s cash equivalents and marketable securities for the periods presented were valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs and were classified as Level 1 or Level 2, accordingly.

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, 2024		January 31, 2024
Computer software	$	23,204	$	22,500
Office equipment	22,967		22,674
Furniture and fixtures	7,949		7,930
Leasehold improvements	60,079		59,927
Construction in progress	9		249
Software in progress	744		370
Total property and equipment, gross	114,952		113,650
Less: accumulated depreciation	(70,915)		(65,108)
Total property and equipment, net	$	44,037	$	48,542

As of July 31, 2024 and January 31, 2024, the Company's property and equipment, net attributable to the United States was 91% and 90%, respectively. No other individual country represented more than 10% of the total property and equipment, net as of those periods. Depreciation expense was $2.9 million and $5.8 million for the three and six months ended July 31, 2024, respectively and $4.4 million and $9.1 million for the three and six months ended July 31, 2023, 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, 2024		January 31, 2024
Accounts payable	$	5,673	$	7,430
Accrued employee compensation	12,086		15,961
Accrued Publisher Network fees	1,956		1,839
Accrued professional services and associated costs	4,456		2,307
Accrued employee stock purchase plan withholdings liability	1,449		1,958
Other current liabilities	8,120		9,271
Total accounts payable, accrued expenses and other current liabilities	$	33,740	$	38,766

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8. Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation represents the cost related to stock-based awards granted in lieu of monetary payment. The Company measures stock-based compensation associated with stock-based awards issued to employees at the grant date, based on the estimated fair value of the award, and recognizes expense, net of estimated forfeitures, over the requisite service period of the applicable award generally using the straight-line method or accelerated attribution method.

The following table summarizes the Company's stock-based compensation expense for the periods presented:

	Three months ended July 31,				Six months ended July 31,
(in thousands)	2024		2023		2024		2023
Cost of revenue	$	698	$	768	$	1,386	$	1,412
Sales and marketing	3,155		4,067		5,906		7,886
Research and development	2,607		2,768		5,390		5,563
General and administrative	5,873		3,962		11,716		7,716
Total stock-based compensation expense	$	12,333	$	11,565	$	24,398	$	22,577

Stock Options

The following table summarizes the activity related to the Company's stock options:

	Outstanding Stock Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Balance, January 31, 2024	2,021,494	$	6.26	2.20	$	989
Granted	—	$	—
Exercised	(258,606)	$	3.06
Forfeited or canceled	(9,709)	$	10.35
Balance, July 31, 2024	1,753,179	$	6.71	1.82	$	227
Vested and expected to vest	1,753,179	$	6.71	1.82	$	227
Exercisable, July 31, 2024	1,753,179	$	6.71	1.82	$	227

Restricted Stock and Restricted Stock Units

The following table summarizes the activity related to the Company's restricted stock and restricted stock units:

	Outstanding	Weighted-Average Grant Date Fair Value
Balance, January 31, 2024	9,790,748	$	7.54
Granted	4,650,552	$	5.58
Vested and converted to shares	(2,183,455)	$	8.96
Forfeited or canceled	(1,424,528)	$	7.12
Balance, July 31, 2024	10,833,317	$	6.47

Performance-Based Restricted Stock Units

The following table summarizes the activity related to the Company’s performance-based restricted stock units ("PSUs"):

	Number of PSUs	Weighted-Average Grant Date Fair Value
Balance, January 31, 2024	3,555,000	$	5.98
Granted	—	$	—
Vested	—	$	—
Forfeited or canceled	(25,000)	$	5.05
Balance, July 31, 2024	3,530,000	$	5.98

As of July 31, 2024, the market conditions accompanying the PSUs were not satisfied and therefore, no shares vested.

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9. Debt

On March 11, 2020, the Company entered into a credit agreement (the “Credit Agreement”) with Silicon Valley Bank (“SVB”). In January 2021, the Company amended the Credit Agreement which modified the conditions pursuant to which subsidiaries are required to become guarantors. On December 22, 2022, the Company entered into a second amendment (“Amendment No. 2”) to the Credit Agreement, dated March 11, 2020, and on July 26, 2024, the Company entered into a third amendment ("Amendment No. 3") to the Credit Agreement, collectively referred to as the Credit Facility. No significant debt issuance costs were incurred in association with Amendment No.2 and Amendment No.3.

Amendment No. 2 amended the Credit Facility to, among other things (i) extend the maturity date of the Credit Facility to December 22, 2025, (ii) amend the interest rate provisions to replace LIBOR with SOFR as the interest rate benchmark, and (iii) amend the recurring revenue growth rate financial covenant.

Amendment No. 3 amended the Credit Facility to, among other things (i) amend the interest rate applicable to loans under the Credit Facility, and (ii) replace the consolidated quick ratio and recurring revenue growth rate financial covenants with consolidated total leverage ratio and minimum liquidity financial covenants.

The Credit Facility provides for a senior secured revolving loan facility of up to $50.0 million that matures on December 22, 2025, with the right subject to certain conditions to add an incremental revolving loan facility of up to $50.0 million in the aggregate. The revolving loan facility provides for borrowings up to the amount of the facility with sub-limits of up to (i) $30.0 million to be available for the issuance of letters of credit and (ii) $10.0 million to be available for swingline loans.

As amended, the revolving loans bear interest, at the Company’s election, at an annual rate based on SOFR or a base rate. Loans based on SOFR shall bear interest at a rate between SOFR plus 1.75% and SOFR plus 2.25%, depending on the Company’s consolidated total leverage ratio and subject to a SOFR floor of 1.00%. Loans based on the base rate shall bear interest at a rate between the base rate minus 1.25% and the base rate minus 0.75%, depending on the Company’s consolidated total leverage ratio. The Company is also obligated to pay a commitment fee on the unused portion of the facility at a rate of 0.25% per annum.

The obligations under the Credit Facility are secured by a lien on substantially all of the Company's tangible and intangible property and by a pledge of all of the Company's equity interests of material direct and indirect domestic subsidiaries and 66% of each class of capital stock of any material first-tier foreign subsidiaries, subject to limited exceptions.

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

As of July 31, 2024, the Company was in compliance with all debt covenants. As of such date, the $50.0 million revolving loan facility had $36.6 million available and $13.4 million in letters of credit allocated as security in connection with office space.

10. Income Taxes

The Company calculates its year-to-date benefit from (provision for) 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, 2024, the Company recorded a benefit from income taxes of $1.4 million and $1.2 million, respectively. During the three and six months ended July 31, 2023, the Company recorded a (provision for) income taxes of $(0.7) million and $(1.0) million, respectively.

The Company's effective tax rate generally differs from the U.S. federal statutory tax rate primarily due to full valuation allowances related to the Company's net deferred tax assets in the U.S. and certain foreign jurisdictions, U.S. state income taxes, and foreign rate differential on profitable jurisdictions. 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.

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11. 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 and short-term lease arrangements for office space. Its other contractual obligations include contracts with its Publisher Network application providers, which generally have a term of one year, although some have a term of several years, and its software vendors, among others. These obligations represent minimum contractual payments, or the Company's best estimate for variable elements based on historical payments. The Company's contractual obligations have various expiry dates between fiscal years 2025 and 2035.

        As of July 31, 2024, the Company's contractual obligations are as follows (in thousands):

Fiscal year ending January 31:	Leases		Other
2025 (remainder of fiscal year)	$	8,562	$	21,342
2026	19,274		15,675
2027	19,340		8,937
2028	19,437		4,525
2029	19,297		16
2030 and thereafter	36,473		94
Total	$	122,383	$	50,589

Legal Proceedings

The Company is and may be involved in various legal proceedings arising in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, currently, in the opinion of the Company, the likelihood of any material adverse impact on the Company's results of operations, cash flows or the Company's financial position for any such litigation or claims is deemed to be remote. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense costs, diversion of management resources and other factors.

Warranties and Indemnifications

The Company's platform is in some cases warranted to perform in a manner consistent with general industry standards that are reasonably applicable and materially in accordance with the Company's product specifications.

The Company's arrangements generally include certain provisions for indemnifying customers against liabilities if its products or services infringe a third-party's intellectual property rights and/or if the Company breaches its contractual agreements with a customer or in instances of negligence, fraud or willful misconduct by the Company. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any significant 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.

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12. 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)	2024		2023		2024		2023
Numerator:
Net loss attributable to common stockholders	$	(4,057)	$	(3,437)	$	(7,874)	$	(3,849)
Denominator:
Weighted-average common shares outstanding	126,535,481		124,358,526		125,967,631		123,821,653
Net loss per share attributable to common stockholders, basic and diluted	$	(0.03)	$	(0.03)	$	(0.06)	$	(0.03)

        Basic net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Unvested restricted stock, restricted stock units, and performance-based restricted stock units where the market conditions have not been met are excluded from the denominator of basic net loss per share. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares plus common equivalent shares for the period, including any dilutive effect from such shares.

Since the Company was in a net loss position for all periods presented, net loss per share attributable to common stockholders was the same on a basic and diluted basis, as the inclusion of all potential common equivalent shares outstanding would have been anti-dilutive. Anti-dilutive common equivalent shares were as follows:

	As of July 31,
	2024	2023
Options to purchase common stock	1,753,179	3,079,658
Restricted stock and restricted stock units	10,833,317	11,167,766
Shares estimated to be purchased under ESPP	373,424	225,903
Performance-based restricted stock units(1)	3,530,000	2,280,000
Total anti-dilutive common equivalent shares	16,489,920	16,753,327

(1) An additional 1.3 million shares of common stock may be awarded for certain PSUs based on the Company's total shareholder return ("TSR") relative to the TSR of companies in the S&P Software and Services Select Index over specified performance periods.

13. Subsequent Events

Following approval by the Company's Board of Directors, on June 10, 2024, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) for the acquisition of Hearsay Social, Inc. (“Hearsay”). Pursuant to the Merger Agreement, Hearsay became a wholly owned subsidiary of Yext upon closing of the transaction on August 1, 2024. The Company acquired Hearsay for approximately $125 million in cash, as adjusted for customary adjustments set forth in the Merger Agreement, and the assumption of Hearsay employee equity awards. The Company also offered participation rights to key employees and former founders of Hearsay in a bonus pool of $20 million that can be settled in cash or the Company’s common stock and shall be subject to 100% vesting on the first anniversary of closing, generally subject to continued employment. In addition, subject to the terms of the Merger Agreement, the Company may also be required to pay additional contingent consideration of up to $75 million to Hearsay based on the achievement of certain milestones (the “Earnout Consideration”). The Earnout Consideration shall be payable based on achievement of certain annual recurring revenue targets. The targets shall be measured at the end of the first and second anniversaries of closing. The Earnout Consideration may be settled in cash or the Company’s common stock at the Company’s election. The Company is currently evaluating the impact of this acquisition on its consolidated financial statements.

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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, 2024, filed with the SEC on March 13, 2024. 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 empowers businesses to manage their knowledge so they can deliver relevant, actionable answers to consumer questions as well as consistent, accurate and engaging experiences to customers throughout the digital ecosystem. Our digital presence platform (also known as the Answers Platform) lets businesses structure and organize information about their brands in our knowledge graph, Yext Content (also known as the Knowledge Graph), which is then delivered across first-and third-party websites and applications through our network of over 200 service and application providers, which we refer to as our Publisher Network. These publishers include, among others, Amazon Alexa, Apple, Bing, Facebook, Google Business Profile, and Yelp. Our platform powers all of our key products, including Listings, Reviews, Pages and Search, each with robust analytics capabilities for businesses to easily track performance across customer experiences. It is our mission to empower businesses to easily manage every aspect of their digital presence to make meaningful connections with their customers across every digital touchpoint.

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 or capacity purchased by 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 2025, for example, are to the fiscal year ending January 31, 2025.

Macroeconomic Conditions

Our results of operations have been and may continue to be influenced by general macroeconomic conditions, including, but not limited to, the impact of foreign currency fluctuations, interest rates, inflation, recession risks and public health emergencies, such as the COVID-19 pandemic. Fluctuations in foreign exchange rates and rising inflation have had, and may continue to have an adverse impact on our financial condition and operating results in future periods. The extent to which such disruptions will continue in future periods remains uncertain, which has had and may continue to have an adverse impact on our financial condition and operating results in future periods. 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.

Near-term revenues are relatively predictable as a result of our subscription-based business model. However, if the macroeconomic uncertainty continues or further increases, we may continue to experience a negative impact on existing and potential customers, that may reduce, suspend or delay technology spending, request to renegotiate contracts to obtain concessions such as, extended billing and payment terms; shorten the duration of contracts; or elect not to renew their subscriptions which could materially adversely impact our business, financial condition and results of operations in future periods. Therefore, changes in our contracting activity in the near term may not be fully reflected in our results of operations and overall financial performance until future periods.

Recent Developments

On June 4, 2024, we committed to a restructuring plan in response to evolving business needs to reduce operating expenses and position Yext for profitable future growth (the “Plan”). The Plan reduced the size of our workforce by approximately 12 percent of our full-time employees as compared to our headcount as of January 31, 2024. We incurred approximately $5 million in costs in connection with the Plan during our second quarter of fiscal year 2025, consisting primarily of severance payments, payments in lieu of notice, employee benefits and related costs. Although the majority of costs were incurred during our second quarter of fiscal year 2025, we may incur additional costs as position eliminations are subject to legal requirements that vary by jurisdiction, which may extend this process beyond the second quarter of fiscal year 2025 in certain cases.

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Following approval by our Board of Directors, on June 10, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) for the acquisition of Hearsay Social, Inc. (“Hearsay”). Pursuant to the Merger Agreement, Hearsay became a wholly owned subsidiary of Yext upon closing of the transaction on August 1, 2024. We acquired Hearsay for approximately $125 million in cash, as adjusted for customary adjustments set forth in the Merger Agreement and the assumption of Hearsay employee equity awards. We also offered participation rights to key employees and former founders of Hearsay in a bonus pool of $20 million that can be settled in cash or our common stock and shall be subject to 100% vesting on the first anniversary of closing, generally subject to continued employment. In addition, subject to the terms of the Merger Agreement, we may also be required to pay additional contingent consideration of up to $75 million to Hearsay based on the achievement of certain milestones (the “Earnout Consideration”). The Earnout Consideration shall be payable based on achievement of certain annual recurring revenue targets. The targets shall be measured at the end of the first and second anniversaries of closing. The Earnout Consideration may be settled in cash or our common stock at our election.

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

Key Metrics

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

Customer Count

Customer count is defined as the total number of customers with contracts executed as of the last day of the reporting period and a unique administrative account identifier on our platform. Generally, we assign unique administrative accounts to each separate and distinct entity (such as a company or government institution) or a business unit of a large corporation, that has its own separate contract with us to access our platform. We believe that customer count provides insight into our ability to grow our enterprise and mid-size customer base. As such, customer count excludes third-party reseller customers and small business customers as well as customers only receiving free trials. From time to time, some customers previously characterized as small business customers may transition to mid-size customers, and customer count includes these changes resulting from any recharacterization. As of July 31, 2024, customer count was approximately 2,970.

Annual Recurring Revenue ("ARR")

Annual recurring revenue, or ARR, for Direct customers is defined as the annualized recurring amount of all contracts in our enterprise, mid-size and small business customer base as of the last day of the reporting period. The recurring amount of a contract is determined based upon the terms of a contract and is calculated by dividing the amount of a contract by the term of the contract and then annualizing such amount. The calculation assumes no subsequent changes to the existing subscription. Contracts include portions of professional services contracts that are recurring in nature.

ARR for Third-party Reseller customers is defined as the annualized recurring amount of all contracts with Third-party Reseller customers as of the last day of the reporting period. The recurring amount of a contract is determined based upon the terms of a contract and is calculated by dividing the amount of a contract by the term of the contract and then annualizing such amount. The calculation assumes no subsequent changes to the existing subscription. The calculation includes the annualized contractual minimum commitment and excludes amounts related to overages above the contractual minimum commitment. Contracts include portions of professional services contracts that are recurring in nature. See Part II Item 1A “Risk Factors" for further discussion of Third-party reseller customers.

Total ARR is defined as the annualized recurring amount of all contracts executed as of the last day of the reporting period. The recurring amount of a contract is determined based upon the terms of a contract and is calculated by dividing the amount of a contract by the term of the contract and then annualizing such amount. The calculation assumes no subsequent changes to the existing subscription, and where relevant, includes the annualized contractual minimum commitment and excludes amounts related to overages above the contractual minimum commitment. Contracts include portions of professional services contracts that are recurring in nature.

ARR is independent of historical revenue, unearned revenue, remaining performance obligations or any other accounting principles generally accepted in the United States of America, ("GAAP"), financial measure over any period. It should be considered in addition to, not as a substitute for, nor superior to or in isolation from, these measures and other measures prepared in accordance with GAAP. We believe ARR-based metrics provides insight into the performance of our recurring revenue business model while mitigating fluctuations in billing and contract terms.

The following table provides our ARR for the periods presented:

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	July 31,				Variance
	2024		2023		Dollars		Percent
(in thousands)
Direct Customers(1)	$	313,392	$	327,212	$	(13,820)	(4)	%
Third-Party Reseller Customers	68,361		70,502		(2,141)		(3)	%
Total Annual Recurring Revenue	$	381,753	$	397,714	$	(15,961)	(4)	%

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

Dollar-Based Net Retention Rate

We believe that our ability to retain our customers and expand the ARR they generate for us over time is an important component of our growth strategy and reflects the long term value of our customer relationships. We assess our performance in this area using a metric we refer to as our dollar-based net retention rate, which compares the ARR from a set of subscription customers across comparable periods.

This metric is calculated first by determining the ARR generated 12 months prior to the end of the current period for a cohort of customers who had active contracts at that time. We then calculate ARR from the same cohort of customers at the end of the current period, which includes customer expansion, contraction and churn. The current period ARR is then divided by the prior period ARR to arrive at our dollar-based net retention rate. The cohorts of customers that we present dollar-based net retention rate for include direct, third-party reseller, and total customers. Direct customers include enterprise, mid-size and small business customers.

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

	July 31,
	2024	2023
Direct Customers (1)	91%	98%
Third-Party Reseller Customers	94%	92%
Total Customers	91%	97%

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

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Components of Results of Operations

Revenue

We derive our revenue primarily from subscription and associated support to our platform. Our contracts are typically one year in length, but may be up to three years or longer in length. Revenue is a function of the number of customers, the number of licenses or capacity purchased by each customer, the package to which each customer subscribes, the price of the package and renewal rates. Revenue is generally recognized ratably over the contract term beginning on the commencement date of each contract, which is the date our platform is made available to customers. At the beginning of each subscription term we invoice our customers, typically in annual installments, but also monthly, quarterly, and semi-annually. Amounts that have been invoiced for non-cancelable contracts 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 Publisher 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, which includes amounts allocated based on employee headcount, as well as amounts related to certain capitalized software development costs incurred in connection with additional functionality to our platform. Cost of revenue also includes lease expenses associated with our office spaces, which are allocated based on employee headcount. In addition, cost of revenue includes software expense, which relates to licenses, professional services, and other costs associated with software for use in the operations of our business, which is also allocated based on employee headcount.

Operating Expenses

Sales and marketing expenses. Sales and marketing expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense. Personnel-related costs mainly consist of salaries and wages and costs of obtaining revenue contracts. Sales and marketing expenses also include lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount. In addition, sales and marketing expenses include costs related to advertising and conferences and brand awareness events.

Research and development expenses. Research and development expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense. Personnel-related costs mainly consist of salaries and wages. Capitalized software development costs related to additional functionality to our platform are excluded from research and development expenses as they are capitalized as a component of property and equipment, net and depreciated to cost of revenue over the term of their useful life. Research and development expenses also include data centers costs associated with pre-production costs for testing and quality assurance, as well as lease expenses associated with our office spaces, and software expense, each of which are allocated based on employee headcount.

General and administrative expenses. General and administrative expenses consist primarily of employee-related costs which are comprised of personnel-related costs and stock-based compensation expense for our finance and accounting, human resources, information technology and legal support departments. Personnel-related costs mainly consist of salaries and wages. General and administrative expenses also include lease expenses associated with our office spaces, as well as software expense, each of which are allocated based on employee headcount, and other professional related costs.

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Results of Operations

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

	Three months ended July 31,				Six months ended July 31,
(in thousands)	2024		2023		2024		2023
Revenue	$	97,887	$	102,598	$	193,877	$	202,051
Cost of revenue(1)	22,293		22,393		43,839		43,743
Gross profit	75,594		80,205		150,038		158,308
Operating expenses:
Sales and marketing(1)	41,957		47,591		85,211		91,587
Research and development(1)	18,580		18,890		35,639		35,643
General and administrative(1)	22,623		17,955		42,180		36,541
Total operating expenses	83,160		84,436		163,030		163,771
Loss from operations	(7,566)		(4,231)		(12,992)		(5,463)
Interest income	2,395		1,840		4,755		3,374
Interest expense	(124)		(88)		(516)		(161)
Other expense, net	(204)		(297)		(342)		(617)
Loss from operations before income taxes	(5,499)		(2,776)		(9,095)		(2,867)
Benefit from (provision for) income taxes	1,442		(661)		1,221		(982)
Net loss	$	(4,057)	$	(3,437)	$	(7,874)	$	(3,849)

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

	Three months ended July 31,				Six months ended July 31,
(in thousands)	2024		2023		2024		2023
Cost of revenue	$	698	$	768	$	1,386	$	1,412
Sales and marketing	3,155		4,067		5,906		7,886
Research and development	2,607		2,768		5,390		5,563
General and administrative	5,873		3,962		11,716		7,716
Total stock-based compensation expense	$	12,333	$	11,565	$	24,398	$	22,577

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

	Three months ended July 31,				Six months ended July 31,
	2024		2023		2024		2023
Revenue	100	%	100	%	100	%	100	%
Cost of revenue	23		22		23		22
Gross profit	77.2		78.2		77.4		78.4
Operating expenses:
Sales and marketing	43		46		44		45
Research and development	19		18		18		18
General and administrative	23		18		22		18
Total operating expenses	85		82		84		81
Loss from operations	(8)		(4)		(7)		(3)
Interest income	2		2		2		2
Interest expense	—		—		—		—
Other expense, net	—		—		—		—
Loss from operations before income taxes	(6)		(2)		(5)		(1)
Benefit from (provision for) income taxes	1		(1)		1		(1)
Net loss	(5)	%	(3)	%	(4)	%	(2)	%

Note: Numbers rounded for presentation purposes and may not sum.

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Three Months Ended July 31, 2024 Compared to Three Months Ended July 31, 2023

Revenue

	Three months ended July 31,						Variance
(in thousands)	2024			2023			Dollars		Percent
Revenue	$	97,887		$	102,598		$	(4,711)	(5)	%
Cost of revenue	22,293			22,393			$	(100)	—	%
Gross profit	$	75,594		$	80,205		$	(4,611)	(6)	%
Gross margin	77.2		%	78.2		%

Total revenue was $97.9 million for the three months ended July 31, 2024, compared to $102.6 million for the three months ended July 31, 2023, a decrease of $4.7 million or 5%, primarily driven by the attrition of a large customer that occurred during the three months ended January 31, 2024. During the three months ended July 31, 2024 and 2023, revenue recognized from subscription and associated support to our platform was 93%, while revenue recognized from professional services was 7%, compared to 92% and 8%, respectively.

Revenue for the three months ended July 31, 2024, was not significantly impacted by foreign currency exchange rates using a constant currency basis. We calculate constant currency by translating our current period results for entities reporting in currencies other than U.S. Dollars (“USD”) into USD at the average monthly exchange rates in effect during the comparative period, as opposed to the average monthly exchange rates in effect during the current period.

The following table summarizes our revenue by sales channel for the periods presented:

	Three months ended July 31,				Variance
	2024		2023		Dollars		Percent
(in thousands)
Direct Customers	$	79,261	$	82,826	$	(3,565)	(4)	%
Third-Party Reseller Customers	18,626		19,772		(1,146)		(6)	%
Total Revenue	$	97,887	$	102,598	$	(4,711)	(5)	%

Revenue attributable to direct customers was $79.3 million for the three months ended July 31, 2024, compared to $82.8 million for the three months ended July 31, 2023. The decrease of $3.6 million, or 4%, was primarily driven by the attrition of a large customer that occurred during the three months ended January 31, 2024. Revenue attributable to third-party reseller customers was $18.6 million for the three months ended July 31, 2024, compared to $19.8 million for the three months ended July 31, 2023, a decrease of $1.1 million or 6%, primarily due to customer attrition.

Cost of Revenue and Gross Margin

Cost of revenue was $22.3 million for the three months ended July 31, 2024, compared to $22.4 million for the three months ended July 31, 2023, a decrease of $0.1 million or less than 1%. The decrease was primarily driven by depreciation expense, which decreased $0.7 million as certain assets have fully depreciated. This decrease was partially offset by personnel-related costs which increased $0.4 million, mainly due to severance recognized from restructuring, as well as smaller increases in professional related costs, and data center costs, among others.

Gross margin was 77.2% for the three months ended July 31, 2024, compared to 78.2% for the three months ended July 31, 2023 as reflected in the discussion above.

Operating Expenses

	Three months ended July 31,				Variance
(in thousands)	2024		2023		Dollars		Percent
Sales and marketing	$	41,957	$	47,591	$	(5,634)	(12)	%
Research and development	$	18,580	$	18,890	$	(310)	(2)	%
General and administrative	$	22,623	$	17,955	$	4,668	26	%

Sales and marketing expense was $42.0 million for the three months ended July 31, 2024, compared to $47.6 million for the three months ended July 31, 2023, a decrease of $5.6 million or 12%. The decrease was primarily driven by employee-related costs as personnel-related costs decreased $3.1 million and stock-based compensation expense decreased $0.9 million, reflecting lower headcount. In addition, conferences and events decreased $0.7 million and depreciation expense decreased $0.5 million as certain assets have fully depreciated. These decreases were partially offset by a $0.7 million increase in advertising costs.

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Research and development expense was $18.6 million for the three months ended July 31, 2024, compared to $18.9 million for the three months ended July 31, 2023, a decrease of $0.3 million or 2%. The decrease was primarily driven by depreciation expense which decreased $0.2 million and stock-based compensation expense which decreased $0.2 million, reflecting lower headcount. In addition, there were smaller decreases in software expense and professional related costs, among others. These decreases were partially offset by a $0.8 million increase in personnel-related costs, mainly due to severance recognized from restructuring.

General and administrative expense was $22.6 million for the three months ended July 31, 2024, compared to $18.0 million for the three months ended July 31, 2023, an increase of $4.7 million or 26%. The increase was primarily driven by a $2.6 million increase in professional related costs largely due to the acquisition of Hearsay. In addition, stock-based compensation expense increased $1.9 million, mainly due to PSUs granted in fiscal year 2024, along with a $0.7 million increase in bad debt expense.

Six Months Ended July 31, 2024 Compared to Six Months Ended July 31, 2023

Revenue

	Six months ended July 31,						Variance
(in thousands)	2024			2023			Dollars		Percent
Revenue	$	193,877		$	202,051		$	(8,174)	(4)	%
Cost of revenue	43,839			43,743			$	96	—	%
Gross profit	$	150,038		$	158,308		$	(8,270)	(5)	%
Gross margin	77.4		%	78.4		%

Total revenue was $193.9 million for the six months ended July 31, 2024, compared to $202.1 million for the six months ended July 31, 2023, a decrease of $8.2 million or 4%, primarily driven by the attrition of a large customer that occurred during the three months ended January 31, 2024. During the six months ended July 31, 2024 and 2023, revenue recognized from subscription and associated support to our platform was 93%, while revenue recognized from professional services was 7%, compared to 92% and 8%, respectively.

Revenue for the six months ended July 31, 2024, included a positive impact from foreign currency exchange rates of approximately $0.4 million, using a constant currency basis. We calculate constant currency by translating our current period results for entities reporting in currencies other than USD into USD at the average monthly exchange rates in effect during the comparative period, as opposed to the average monthly exchange rates in effect during the current period.

The following table summarizes our revenue by sales channel for the periods presented:

	Six months ended July 31,				Variance
	2024		2023		Dollars		Percent
(in thousands)
Direct Customers	$	156,696	$	162,871	$	(6,175)	(4)	%
Third-Party Reseller Customers	37,181		39,180		(1,999)		(5)	%
Total Revenue	$	193,877	$	202,051	$	(8,174)	(4)	%

Revenue attributable to direct customers was $156.7 million for the six months ended July 31, 2024, compared to $162.9 million for the six months ended July 31, 2023. The decrease of $6.2 million, or 4%, was primarily driven by the attrition of a large customer that occurred during the three months ended January 31, 2024. Revenue attributable to third-party reseller customers was $37.2 million for the six months ended July 31, 2024, compared to $39.2 million for the six months ended July 31, 2023, a decrease of $2.0 million or 5%, primarily due to customer attrition.

Cost of Revenue and Gross Margin

Cost of revenue was $43.8 million for the six months ended July 31, 2024, compared to $43.7 million for the six months ended July 31, 2023, an increase of $0.1 million or less than 1%. The increase was primarily driven by a $1.0 million increase in personnel-related costs, mainly due to severance recognized from restructuring. In addition, professional related costs increased $0.4 million and data center costs increased $0.4 million. These increases were partially offset by a $1.7 million decrease in depreciation expense as certain assets have fully depreciated.

Gross margin was 77.4% for the six months ended July 31, 2024, compared to 78.4% for the six months ended July 31, 2023 as reflected in the discussion above.

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Operating Expenses

	Six months ended July 31,				Variance
(in thousands)	2024		2023		Dollars		Percent
Sales and marketing	$	85,211	$	91,587	$	(6,376)	(7)	%
Research and development	$	35,639	$	35,643	$	(4)	—	%
General and administrative	$	42,180	$	36,541	$	5,639	15	%

Sales and marketing expense was $85.2 million for the six months ended July 31, 2024, compared to $91.6 million for the six months ended July 31, 2023, a decrease of $6.4 million or 7%. The decrease was primarily driven by employee-related costs, as personnel-related costs decreased $2.5 million and stock-based compensation expense decreased $2.0 million, reflecting lower headcount, as well as depreciation expense which decreased by $0.9 million as certain assets have fully depreciated. In addition, there were smaller decreases in employee travel costs, among others. These decreases were partially offset by an increase in advertising costs of $0.9 million.

Research and development expense was $35.6 million for the six months ended July 31, 2024 and 2023, which remained relatively consistent, resulting in a decrease of less than 1%. The decrease was primarily driven by a $0.4 million decrease in depreciation expense as certain assets have fully depreciated, a $0.3 million decrease in professional and recruiting fees, and smaller decreases in stock-based compensation expense, among others. These decreases were partially offset by a $1.6 million increase in personnel-related costs, mainly due to severance recognized from restructuring.

General and administrative expense was $42.2 million for the six months ended July 31, 2024, compared to $36.5 million for the six months ended July 31, 2023, an increase of $5.6 million or 15%. The increase was primarily driven by employee-related costs, as stock-based compensation expense increased $4.0 million, mainly due to PSUs granted in fiscal year 2024. In addition, professional related costs increased $3.0 million, primarily due to the acquisition of Hearsay. These increases were partially offset by smaller decreases in depreciation expense, among others.

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Net Loss

Net loss was $4.1 million and $7.9 million for the three and six months ended July 31, 2024, respectively and $3.4 million and $3.8 million for the three and six months ended July 31, 2023, respectively.

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with GAAP, we believe that certain non-GAAP financial measures are useful in evaluating our operating performance and our business.

Non-GAAP net income (loss) is a financial measure that is not calculated in accordance with GAAP. We define non-GAAP net income (loss) as our GAAP net income (loss) as adjusted to exclude the effects of stock-based compensation expense, acquisition-related costs, amortization of acquired intangibles, and the related income tax effect of these adjustments. Acquisition-related costs include transaction costs, subsequent fair value movements in contingent consideration, and compensation arrangements. We believe non-GAAP net income (loss) provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period-to-period comparisons of our results of operations. We also believe non-GAAP net income (loss) is useful in evaluating our operating performance compared to that of other companies in our industry, as it eliminates the effects of stock-based compensation, acquisition-related costs, and amortization of acquired intangibles, which may vary for reasons unrelated to overall operating performance.

In addition, beginning in fiscal 2025, we are utilizing a projected tax rate of 25% in our computation of the non-GAAP income tax provision. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

We use non-GAAP net income (loss) in conjunction with traditional GAAP net income (loss) as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, and to evaluate the effectiveness of our business strategies.

Adjusted EBITDA is a non-GAAP financial measure that we believe offers a useful view of overall operations used to assess the performance of core business operations and for planning purposes. We define Adjusted EBITDA as GAAP net income (loss) before (1) interest income (expense), net, (2) benefit from (provision for) income taxes, (3) depreciation and amortization, (4) other income (expense), net, (5) stock-based compensation expense, and (6) acquisition-related costs. The most directly comparable GAAP financial measure to Adjusted EBITDA is GAAP net income (loss). Users should consider the limitations of using Adjusted EBITDA, including the fact that this measure does not provide a complete measure of our operating performance. Adjusted EBITDA is not intended to purport to be an alternate to GAAP net income (loss) as a measure of operating performance.

The definitions of our non-GAAP financial measures may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish this or similar metrics. Thus, our non-GAAP financial measures should be considered in addition to, not as a substitute for, nor superior to or in isolation from, measures prepared in accordance with GAAP.

Our non-GAAP financial measures may be limited in their usefulness because they do not present the full economic effect of the expenses mentioned above. We compensate for these limitations by providing a reconciliation of our non-GAAP financial measures to the most closely related GAAP financial measures. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non-GAAP net income (loss) and Adjusted EBITDA in conjunction with GAAP net income (loss).

Recent Changes in Non-GAAP Metrics

Beginning with the three months ended July 31, 2024, we revised our definitions of Non-GAAP net income (loss) and Adjusted EBITDA to adjust for the effects of certain acquisition-related costs prompted by our recent acquisition of Hearsay. We believe these changes provide investors with a view of continuing core operations without the effects of unusual activity specific to acquisition-related accounting. These adjustments do not omit or adjust for the inclusion of ongoing operations of acquisitions.

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

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

	Three months ended July 31,				Six months ended July 31,
(in thousands)	2024		2023		2024		2023
GAAP net loss	$	(4,057)	$	(3,437)	$	(7,874)	$	(3,849)
Plus: Stock-based compensation expense	12,333		11,565		24,398		22,577
Plus: Acquisition-related costs	2,169		—		2,169		—
Plus: Amortization of acquired intangibles	—		—		—		—
Less: Tax adjustment(1)	(3,693)		—		(5,589)		—
Non-GAAP net income	$	6,752	$	8,128	$	13,104	$	18,728

(1) Beginning in fiscal 2025, we are utilizing a projected tax rate of 25% in our computation of the non-GAAP income tax provision. Our estimated tax rate on non-GAAP income is determined annually and may be adjusted during the year to take into account events or trends that we believe materially impact the estimated annual rate including, but not limited to, significant changes resulting from tax legislation, material changes in the geographic mix of revenue and expenses and other significant events. Our estimated tax rate on non-GAAP income may differ from our GAAP tax rate and from our actual tax liabilities.

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

	Three months ended July 31,				Six months ended July 31,
(in thousands)	2024		2023		2024		2023
GAAP net loss	$	(4,057)	$	(3,437)	$	(7,874)	$	(3,849)
Interest (income) expense	(2,271)		(1,752)		(4,239)		(3,213)
(Benefit from) provision for income taxes	(1,442)		661		(1,221)		982
Depreciation and amortization	2,851		4,420		5,814		9,089
Other expense (income)	204		297		342		617
Stock-based compensation expense	12,333		11,565		24,398		22,577
Acquisition-related costs	2,169		—		2,169		—
Adjusted EBITDA	$	9,787	$	11,754	$	19,389	$	26,203

Constant Currency

We provide revenue, including year-over-year growth rates, adjusted to remove the impact of foreign currency rate fluctuations, which we refer to as constant currency. We believe providing revenue on a constant currency basis helps our investors to better understand our underlying performance, given the current macroeconomic environment. We calculate constant currency by using the current period results for entities reporting in currencies other than USD, which are then converted into USD at the average monthly exchange rates in effect during the comparative period, as opposed to the average monthly exchange rates in effect during the current period. Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish these or similar metrics. Thus, our revenue on a constant currency basis should be considered in addition to, not as a substitute for, nor superior to or in isolation from, measures prepared in accordance with GAAP. We provide a reconciliation of revenue on a constant currency basis to the most closely related GAAP financial measure. We encourage investors and others to review our financial information in its entirety and to view revenue on a constant currency basis in conjunction with revenue on a GAAP basis.

The following table provides a reconciliation of revenue on a GAAP basis to revenue on a constant currency basis:

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	Three months ended July 31,
(in thousands)	2024		2023		Growth Rates
Revenue (GAAP)	$	97,887	$	102,598	(5)	%
Effects of foreign currency rate fluctuations	(70)
Revenue on a constant currency basis (Non-GAAP)	$	97,817			(5)	%
	Six months ended July 31,
	2024		2023		Growth Rates
Revenue (GAAP)	$	193,877	$	202,051	(4)	%
Effects of foreign currency rate fluctuations	(394)
Revenue on a constant currency basis (Non-GAAP)	$	193,483			(4)	%

Liquidity and Capital Resources

As of July 31, 2024, our principal sources of liquidity were cash and cash equivalents of $234.8 million. We believe our existing cash and cash equivalents, inclusive of our acquisition of Hearsay on August 1, 2024, will be sufficient to meet our projected operating requirements for at least the next 12 months. Our cash flows, including net cash used in or provided by operating activities, may vary significantly from quarter to quarter, due to the timing of billings, cash collections and lease payments, significant marketing events and related expenses, and other factors.

Our future capital requirements will depend on many factors, including those set forth under "Risk Factors". We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies, and intellectual property rights. In addition, we may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition would be adversely affected.

Credit Arrangements

On March 11, 2020, we entered into a credit agreement (the “Credit Agreement”) with Silicon Valley Bank (“SVB”). In January 2021, we amended the Credit Agreement which modified the conditions pursuant to which subsidiaries are required to become guarantors. On December 22, 2022, we entered into a second amendment (“Amendment No. 2”) to the Credit Agreement, dated March 11, 2020, and on July 26, 2024, we entered into a third amendment ("Amendment No. 3") to the Credit Agreement, collectively referred to as the Credit Facility. No significant debt issuance costs were incurred in association with Amendment No.2 and Amendment No.3.

Amendment No. 2 amended the Credit Facility to, among other things (i) extend the maturity date of the Credit Facility to December 22, 2025, (ii) amend the interest rate provisions to replace LIBOR with SOFR as the interest rate benchmark, and (iii) amend the recurring revenue growth rate financial covenant.

Amendment No. 3 amended the Credit Facility to, among other things (i) amend the interest rate applicable to loans under the Credit Facility, and (ii) replace the consolidated quick ratio and recurring revenue growth rate financial covenants with consolidated total leverage ratio and minimum liquidity financial covenants.

The Credit Facility provides for a senior secured revolving loan facility of up to $50.0 million that matures on December 22, 2025, with the right subject to certain conditions to add an incremental revolving loan facility of up to $50.0 million in the aggregate. The revolving loan facility provides for borrowings up to the amount of the facility with sub-limits of up to (i) $30.0 million to be available for the issuance of letters of credit and (ii) $10.0 million to be available for swingline loans.

As amended, the revolving loans bear interest, at our election, at an annual rate based on SOFR or a base rate. Loans based on SOFR shall bear interest at a rate between SOFR plus 1.75% and SOFR plus 2.25%, depending on our consolidated total leverage ratio and subject to a SOFR floor of 1.00%. Loans based on the base rate shall bear interest at a rate between the base rate minus 1.25% and the base rate minus 0.75%, depending on our consolidated total leverage ratio. We are also obligated to pay a commitment fee on the unused portion of the facility at a rate of 0.25% per annum.

The obligations under the Credit Facility are secured by a lien on substantially all of our tangible and intangible property and by a pledge of all of our equity interests of material direct and indirect domestic subsidiaries and 66% of each class of capital stock of any material first-tier foreign subsidiaries, subject to limited exceptions.

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

29

As of July 31, 2024, we were in compliance with all debt covenants. As of such date, the $50.0 million revolving loan facility had $36.6 million available and $13.4 million in letters of credit allocated as security in connection with office space.

Share Repurchase Program

In March 2022, our Board of Directors authorized a $100.0 million share repurchase program of our common stock. In September 2023, our Board of Directors authorized an additional $50.0 million to the share repurchase program. During the six months ended July 31, 2024, 43,270 shares were purchased and as of July 31, 2024, approximately $49.8 million remains available for future purchases, exclusive of commissions paid on the repurchase of shares.

Cash Flows

The following table summarizes our cash flows:

	Six months ended July 31,
(in thousands)	2024		2023
Net cash provided by operating activities	$	27,660	$	19,710
Net cash used in investing activities	$	(1,192)	$	(1,567)
Net cash used in financing activities	$	(2,008)	$	(8,261)

Operating Activities

Net cash provided by operating activities of $27.7 million for the six months ended July 31, 2024 reflected our net loss of $7.9 million, adjusted by non-cash charges including stock-based compensation expense of $24.4 million, depreciation and amortization expense of $5.8 million, and amortization of operating lease right-of-use assets of $4.3 million. In addition, there were positive adjustments resulting from changes in accounts receivable of $62.0 million, mainly due to the timing of billing and cash collections during the period, as well as changes in costs to obtain revenue contracts of $7.6 million. These increases were partially offset by changes in unearned revenue of $56.4 million, as well as changes in accounts payable, accrued expenses and other current liabilities of $4.6 million, operating lease liabilities of $5.7 million, and prepaid expenses and other current assets of $3.2 million.

Net cash provided by operating activities of $19.7 million for the six months ended July 31, 2023 reflected our net loss of $3.8 million, adjusted by non-cash charges including stock-based compensation expense of $22.6 million, depreciation and amortization expense of $9.1 million, and amortization of operating lease right-of-use assets of $4.6 million. In addition, there were positive adjustments resulting from changes in accounts receivable of $54.9 million, mainly due to timing of billing and cash collections during the period, as well as changes in costs to obtain revenue contracts of $6.6 million. These increases were partially offset by changes in unearned revenue of $55.3 million, as well as changes in accounts payable, accrued expenses and other current liabilities of $14.2 million, and operating lease liabilities of $5.8 million.

Investing Activities

Net cash used in investing activities of $1.2 million for the six months ended July 31, 2024 reflected capital expenditures.