Yext, Inc.

Value Creation and Capital Allocation

Last quarter, we laid out a three-part capital allocation framework designed to enhance shareholder value by reducing dilution from equity compensation, reducing the share count, and growing free cash flow. This quarter we made measurable progress across all three fronts. Stock-based compensation was $10.0 million, down 23% from a year ago. We repurchased approximately 1.8 million shares, roughly 2%of shares outstanding, at an average price of $4.78, and we ended July with 99.3 million shares outstanding. Since the beginning of fiscal 2023, we have repurchased 55.1 million shares and reduced our outstanding share count by about 24%. We have also grown free cash flow from $11.7 million in fiscal 2023 to $53.3 million in fiscal 2026. Keep in mind that our free cash flow in FY26 included the impact of incentive payments related to the Hearsay acquisition of approximately $20 million. Excluding the one-time Hearsay incentive payments, pro forma fiscal 2026 free cash flow was $73.2 million. We expect further growth in free cash flow and are targeting annualized free cash flow per share of at least $1 over the medium term.

We explained in the June letter why we measure dilution in net new shares issued rather than by stock-based compensation expense alone, and this year we built that principle directly into our equity program. We eliminated the evergreen provision from our equity plan, so shares can no longer be added to the pool automatically, with any future increase requiring shareholder approval. Roughly two-thirds of the long-term retention grants made this spring vest only if our stock reaches prices between $9 and $20 per share. The details are in our proxy statement, and I'd encourage reviewing them to see how our incentives are aligned with our fellow shareholders.

A quick aside on cash flow. Cash generation in our business is seasonal as most of our contracts bill annually, with collections concentrated in the fourth and first fiscal quarters, and the second and third quarters running at the low-water mark. Free cash flow was $7.7 million this quarter, compared to $37.0 million in the first quarter, consistent with typical seasonality. For the twelve months ended July 31, 2026, free cash flow was $53.0 million, and we expect a meaningful step-up in trailing twelve month free cash flow beginning in the third quarter as we fully lap the approximate $20 million of Hearsay retention payments made in FY26. We ended the second quarter with $86.8 million in cash and cash equivalents, another $13.5 million of restricted cash, and $147.7 million of debt associated with our credit facility, for net debt of $60.9 million, or about 0.5 times trailing twelve month Adjusted EBITDA.

Given our strong free cash flow profile, we have the financial flexibility to pursue accretive capital allocation opportunities moving forward.