Home Markets YEXT: The Emerging Force In Intelligent Search

YEXT: The Emerging Force In Intelligent Search

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“Eco, order a 12” Pizza with pepperoni from Stromboli’s and have it delivered”.

Most of us have watched this commercial on TV more than once. Eco is one way Artificial Intelligence is making an impact. Eco uses something called Intelligent Search and this is what software company YEXT does for a living.

Today the vast majority of online searches go through third-party sources such as data aggregators, governmental agencies and consumers. The net result of this third party sourcing has been to produce “best guess” data that can often miss or misstate the target data field.

YEXT developed a better way to source critical digital knowledge. They built their software platform on the premise that the best source of accurate and timely digital knowledge about a business is the business itself.  So far with 110 corporate clients and almost $90 million in revenue, YEXT could be the next big thing.

How YEXT Works

Most of us are familiar with big time search engines like Google, Google Maps, Facebook, Instagram, Bing, Cortana, Apple Maps, Siri and Yelp. These pioneering companies are the major drivers in information search today. However, we also know, their accuracy is not exactly ideal.

This is where YEXT steps in. Their knowledge engine platform lets business manage their digital knowledge in the cloud and sync it to over 100 services including the kingpins of search noted above.

Intelligent Search is the structured information that a business wants to make publicly accessible. In food service it could be the address, phone number or menu details of a restaurant; in healthcare, the health insurances accepted by a physician or the precise drop-off point of the emergency room at a hospital campus; or in finance, the ATM locations, retail bank holiday hours or insurance agent biographies.

Artificial Intelligence Offers a Potential $10 Billion Market

Improving search results in general is nice but not very sexy. It doesn’t make you want to beg for more information. However, when you consider the role of Artificial Intelligence (AI) in our evermore data intense world, the importance of Intelligent Search and the opportunities for YEXT becomes a compelling story.

The AI trend is already underway as YEXT is increasingly using the structured data on their platform to expand or add new integrations with vertically specialized applications, voice-based search and AI engines.

Just Right For Big Data Applications

According to their preliminary prospectus, YEXT customers use their platform to manage their digital knowledge covering over 17 million attributes and nearly one million locations. These customers include leading businesses in a diverse set of industries, such as healthcare and pharmaceuticals, retail, financial services, manufacturing and technology.

Major customers include: AutoZone, Ben & Jerry’s, Best Buy, Citibank, Denny’s, Farmers Insurance Group, H&R Block, HCA, Infiniti, Marriott, Michael’s, McDonald’s, Rite Aid, Steward Health Care and others. The list is growing.

Management believes the market for digital knowledge management is large and mostly untapped with over 100 million potential business locations and points of interest in the world equaling over $10 billion.

Designed For Acquisitions and Broad AI Penetration 

If you are into AI at all, you got to love YEXT’s business model. Founded in 2006 by serial entrepreneurs Howard Lerman (CEO) and Brian Distelburger, President these two are typical software guys whose vision appears much more broad based the their current focus with YEXT. Here is where their recent prospectus offers some mystery and excitement to the story.

After reviewing the document, here is what I discovered. Unlike most rapid growth tech companies YEXT does not have an urgent need to go public. They generated almost $60 million in gross profit in 2016 before heavy marketing costs resulted in a loss of $26.5 million. Even so, they still ended the year with $20 million in cash. That’s a long way from being destitute.

The company’s sole reason for the IPO is to establish a liquid public market for the stock. They expect to raise about $100 million, all of which will go into the bank. The company is debt free and there are no insiders selling stock. Very interesting.

All of this adds up to a business plan that is likely to see some important acquisition activity in the future that will build and broaden the current YEXT platform making the company a much bigger player in the field of AI.

The preliminary prospectus was just filed on March 13, 2017 so it will be a while before the world is exposed to YEXT. The list of underwriters that includes JP Morgan, Morgan Stanley and RBC Capital Markets, suggests this will be a well marketed offering with a cool and memorable name to go with it.

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