Company: YEXT
Filing Date: 2025-04-28
Form Type: ARS
Source: 0001614178-25-000048
Chunk: 101

Company: Yext, Inc.
Filing Date: 2025-04-28
Form: ARS
Chunk 101
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 year-end through tests of details and analytical procedures, including the recalculation of balances on a disaggregated basis. Finally, we assessed the appropriateness of the related disclosures in the consolidated financial statements. Accounting for the Hearsay Social, Inc. Acquisition Description of the Matter On August 1, 2024, the Company completed the acquisition of Hearsay Social, Inc. (“Hearsay”) for total purchase consideration of $180.4 million, including contingent consideration of $39.5 million. This transaction was accounted for as a business combination as outlined in Note 4 using the acquisition method of accounting which requires, among other things, the identifiable assets acquired and liabilities assumed in the acquiree, to be measured at their fair values, as of the acquisition date. Any excess of the fair value of consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed is recorded as goodwill. Auditing the Company’s accounting for its acquisition of Hearsay was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of the acquired customer relationships intangible asset, which was valued and recorded at $76.2 million, as well as the contingent consideration liability, which was valued and recorded at $39.5 million as part of the total purchase consideration of $180.4 million. The significant assumptions used in the valuation of the customer relationships intangible asset included a discount rate and certain assumptions that form the basis of the forecasted results including revenue and annual revenue growth rates, EBITDA margin, customer attrition rates, and certain contributory asset charges. The Company used the Multi-Period Excess-Earnings Method to measure the customer relationships intangible asset with the assistance of a third-party valuation specialist. The significant assumptions used in the valuation of the contingent consideration liability included a discount rate and projected Annual Recurring Revenue (“ARR”) values. The Company used the Monte Carlo model to measure the fair value of the contingent consideration liability with the assistance of a third-party valuation specialist. These significant assumptions are forward looking and could be affected by future economic and market conditions. 61

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s accounting for the Hearsay acquisition. For example, we tested controls over management’s review of the valuation of the customer relationships intangible asset and contingent consideration liability, including management’s review of the valuation models applied and significant underlying assumptions. We also tested management’s internal controls to