Media Moves

Coverage: Software company Yext rises 22 percent after IPO

April 14, 2017

Posted by Chris Roush

Screen Shot 2017-04-13 at 8.37.01 PMTech company Yext began trading Thursday after it raised $115 million from its initial public offering, and the stock closed up 22 percent during the first day.

Anita Balakrishnan of had the news:

Yext provides cloud-based search technology that helps consumers “discover new businesses, read reviews and find accurate answers to their queries,” according to regulatory filings. Businesses can subscribe to Yext’s advertising and marketing services to control their “digital presence.”

For example, when a company like McDonald’s opens a new location, they can enter the information into Yext’s product, and it automatically updates with partners like Google Maps, Siri and Facebook, Yext CEO Howard Lerman told CNBC’s “Squawk Alley” on Thursday.

“We have an enormous tailwind behind us,” Lerman said. “When users look for things today — like, if they were to ask, ‘Siri, where’s the nearest McDonald’s?’ There’s no web results…there’s no 10 blue links. She just tells you directly.”

The New York City-based start-up priced its 10.5 million share offering at $11 per share, above the expected range of $8 a share to $10 a share. Shares closed at $13.41 a share.

The $115.5 million public offering marks the latest in a string of tech offerings that have reawakened the IPO market. Yext is the sixth tech IPO year-to-date, the most number of tech IPOs to this point since 2014, according to Richard Peterson of S&P Global Market Intelligence.

Heather Long of focused on CEO Howard Lerman:

Like most New Yorkers, Howard Lerman talks quickly and dresses in black.

The 37-year-old is CEO of Yext, which just had one of the biggest public debuts ever for a startup born in the Big Apple.

Yext (YEXT) stock started trading on the New York Stock Exchange Thursday, surging 22%. The company is now worth over $1 billion.

“I’m an East Coast guy,” Lerman told CNNMoney.

Lerman grew up in northern Virginia, just as AOL was exploding on the scene. He went to Duke University and just couldn’t see himself in Silicon Valley.

“When you’re starting a company, you need to rely on people around you to work for free for a long time,” Lerman says. He met Yext’s chief operating officer, Tom Dixon, in middle school. He still remembers the day Dixon brought a Pentium chip to class. It was the beginning of a long friendship, fused with a common love of tech.

“They were scary bright kids,” remembers Vern Williams, their math teacher at Longfellow Middle School in Falls Church, Virginia. “They didn’t like routine or textbooks. They wanted to push their creative juices.”

Alex Konrad of Forbes noted the IPO was small compared to other recent offerings:

After Okta’s IPO last week and compared to other recent tech exits such as AppDynamics’ $3.7 billion acquisition by Cisco and the IPOs for Mulesoft and Snap, Yext’s public offering was more meager in scale. The company lost $43 million on revenue of $124 million in its past fiscal year, five years since CEO Howard Lerman repurposed the company, selling its previous and profitable advertising business to IAC for $30 million to focus on helping companies track their digital identities across the Web. Today Yext works with customers to manage their digital listings across more than 100 third-party providers such as Apple’s iOS, Google search and Facebook.

While some tech companies have shunned the public markets for the structure and accountability to investors and a quarterly earnings cycle that listing brings, Lerman says that the move made since for Yext given the nature of its revenue model and customer base. As a subscription software business, Yext already has clear visibility into its revenue growth and billings for the foreseeable future, the cofounder says; with financial services a major customer base, Yext also already needed auditing on par with the IPO process.

Still, for a company more five-years-old than its formal founding in 2006 would imply, Yext jumped into the public markets earlier than many of its peers today. The company likely could’ve raised more private capital on par with the more than $100 million it’s taken in from the IPO, without the complexity of navigating the public markets. For Lerman, the reason to still go public is something of a throwback to earlier eras of quick IPOs: marketing and visibility.

Subscribe to TBN

Receive updates about new stories in the industry daily or weekly.

Subscribe to TBN

Receive updates about new stories in the industry.