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Yext said earlier this year that it would cut around 8% of its workforce.
Craig Barritt/Getty Images for Yext)
Yext
shares were surging after the company reported first-quarter results that beat expectations and raised its full-year guidance Tuesday. The marketing-software company is positioning itself as a play on generative artificial-intelligence but is also benefiting from cutting its workforce.
Yext
(ticker: YEXT) shares were up 41% in early trading on Wednesday at $13.58, putting the stock on track for its biggest daily percentage gain on record. The price has more than doubled this year so far.
It’s a significant boost for a company that has been trying to mount a turnaround. Former CEO and founder Howard Lerman stepped down last year as the company struggled to deliver growth and the share price hit its lowest levels since its initial public offering in 2017.
Yext said Tuesday that it broke even on a per-share basis for its first quarter to April 30, compared with a loss of 20 cents a share in the first quarter of the previous fiscal year. Adjusted for one-time items, Yext earned 9 cents a share. Revenue rose 1% to $99.5 million.
The consensus call among analysts was for an adjusted profit of 5 cents a share on sales of $98.5 million, according to FactSet.
Executives at Yext, which specializes in helping businesses improve their online search performance, said the results showed it was becoming more efficient after the company said earlier this year it would lay off around 8% of its staff. They also highlighted its AI efforts.
“Our launches of Content Generation Studio and Yext Chat in beta have been catalysts for more in-depth discussions around Generative AI,” CEO Michael Walrath told analysts on an earnings call.
Analysts at Roth MKM, led by Rohit Kulkarni, upgraded their rating on the stock to Buy from Neutral, raising their target price to $12.50 from $8.50.
“We are encouraged by management’s focus on sales execution and profitable growth. Plus, upcoming AI products unlock new TAM [total addressable market], and could help reposition Yext as the de facto AI partner for large enterprises,” Kulkarni wrote.
The company raised its guidance for fiscal 2024, saying it expects revenue to be in a range of $404 million to $407 million, and adjusted EPS between 28 cents and 29 cents. It had previously guided for revenue of $402 million-$406 million, and adjusted EPS between 22 cents and 23 cents.
D.A. Davidson analyst Tom White raised his target price on the stock to $11.50 from $10 previously. He said the results showed better-than-expected expense efficiencies and encouraging trends in the company’s core business
“We remain Neutral rated for the time being, given the still early stage of YEXT’s turnaround and the fluid macro backdrop as it relates to enterprise spending,” White wrote.
Write to Adam Clark at [email protected]
Source: https://www.barrons.com/articles/yext-stock-ai-layoffs-search-dc17858e?siteid=yhoof2&yptr=yahoo