YEXT describes itself as a "knowledge engine", saying that its platform allows businesses to manage their digital knowledge in the cloud and to sync it to many different services and platforms including Apple Maps, Bing, Facebook, Google Maps, Siri, and Instagram. It further describes digital knowledge as the structured information that a business wants to make publicly accessible -- such as addresses, phone numbers, menu details, health insurances accepted, ATM locations, holiday hours, and many other points of information.
Its platform serves as the system of record for the vital information used internally to execute operations and distributed externally across the web, mobile listings, search platforms, applications, social media and connected devices that leverage intelligent search.
It offers its cloud-based digital knowledge platform, Yext Knowledge Engine, to customers on a subscription basis in several packages. Each package provides varying levels of access to its key Listings, Pages, Reviews and other features. Its Listings feature provides customers with control over their digital presence, including their location and other related attributes published on the most widely used third-party applications. The Pages feature allows customers to establish landing pages on their own websites and to manage rich and compelling digital content on those sites, including calls to action. And its Reviews feature enables customers to encourage and facilitate reviews from end consumers, thereby increasing the quantity and quality of the reviews available to potential consumers and improving the search relevance for businesses on our PowerListings Network.
Looking at its financials, for FY17 revenue was up a healthy 39% year/year to $124.3 million. Revenues increased primarily due to the continued growth of our customer base and expanded subscriptions sold to existing customers. Approximately $13.2 million of this increase was attributable to new customers during the period. Growth was even greater for revenue from its enterprise and mid-size business and reseller customers, which represent the substantial majority of its revenue, and not including direct sales to small business customers, which by their nature have limited locations and experience inherently high turnover.
Gross margin improved to 70.2% from 65.4% due to revenue outpacing the increase in cost of revenues. Cost of revenue increased 19% due to an increase in PowerListings Network application provider fees of $2.8 million, which grew from $16.3 million to $19.1 million, as some of its PowerListings Network application provider costs are variable and increase with increased sales volume.
Despite the double-digit revenue growth and improving gross margin, operating loss widened to ($42.7) million from ($26.1) million in the year ago period. From a cash flow standpoint, YEXT also is not profitable, but, at least it is moving in the right direction as cash burn decreased to ($7.7) million from ($10.5) million. The balance sheet is in good shape with a limited amount of long term debt and over $24 million in cash, prior to the proceeds of this IPO.