Yext, Inc.

Good afternoon, and welcome to the Yext Fourth Quarter Fiscal 2021 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Yuka Broderick, Head of Investor Relations. Please go ahead.

Thank you, Gary, and good afternoon, everyone. Welcome to YEC's fiscal fourth quarter 2021 conference call. With me today are CEO Howard Lerman, President and Chief Revenue Officer David Rudnitsky, and CFO Steve Cakebread. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements. including statements about revenue, non-get net income, operating cash flow, sales efficiency, hiring targets, expense margins, market opportunities, business performance, including of our listings and Answers products, capital expenditures, and other non-historical statements as further described in our press release. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to Yext's growth, the evolution of our industry, our product development and success, including with Answers, and general economic and business conditions, such as the impact of the COVID-19 pandemic. We undertake no obligation to revise any statements to reflect changes that occur after this call. Descriptions of these and other risks that could cause actual results to differ materially from these forward-looking statements are discussed in our reports filed with the SEC, including our most recent quarterly and annual reports and our press release that was issued this afternoon. During the call, we also refer to non-GAAP financial measures. Reconciliations with the most comparable gap measures are also available in the press release, which is available at investors.yext.com. With that, I will turn the call over to Howard.

Thanks, Yuka. You know, I couldn't be more proud of what we accomplished during a challenging year. First, despite extraordinary headwinds from location lockdowns that disrupted the core value proposition of listings, it's Product annually recurring revenue still grew this year. Next, we built a more durable and sustainable business model going forward. We were operating cash flow positive for the year, non-GAAP net income positive for Q4, and we showed a tremendous 16-point improvement in non-GAAP operating margin versus the year-ago quarter. Finally, we stood up a new search category disruptor product in the X-Dancers. As the world comes back, we're ready. But it has not been easy. Our fiscal year started last February, and in a matter of days, we were dealing with the onslaught of a global pandemic. Like every business, we faced challenges and had to make a number of adjustments. Our typical event and in-person sales approach was severely hampered. But this forced us and led us to focus on efficiency. And you can see that quantitatively. A dramatic seven-point improvement in our non-gap sales and marketing percentage, spend as a percentage of revenue, From 61% in the year-ago quarter to 54% in Q4, listings felt the force of the macroeconomic headwinds that brought foot traffic to businesses to a halt. Now, people still search for a lot of important answers that our listing solution provides. These include answers on products and doctors, FAQs and jobs, just to name a few. This was and still is critical across most industries, but the reality is seeking information about physical locations, like driving directions or operating hours, has been severely impacted by COVID. In fact, in Q4, Google Maps views for our customers declined over 50% year-over-year on a per-location basis. Now, recall, we told you early in fiscal 2021 that 25% to 30% of our total ARR comes from retail and food services, which are heavily location-oriented. And as we know, these industries have still not recovered. I recently took a drive around Aventura, Florida. The popular mall was pretty empty. Shopping centers look like they're at 20% capacity. Parking is always a no. Despite all of that, ARR for our listings product still managed to grow last year, and that is a sign of its resilience and strategic significance for our customers. Now, meanwhile, we saw strong momentum with our Answers site search product. We closed 130 answers-led deals in Q4, up from 86 in Q3. And answer search queries in Q4 grew 16 times the year-ago quarter. This is just the beginning. Keyword search hasn't changed in 40 years. It's a subpar customer experience. It slows businesses down, yet it is still ubiquitous. Companies make huge investments in search, site search, workplace search, e-commerce search, app search. Support search. Building these search experiences is expensive. You've got to have a team of experts, and the end result is never good enough when it's keyword search. So keyword search is ripe for disruption. With Yes to Answers, we've invented a better, faster, cheaper search. Why hire a team of PhDs to build a search engine over years that only handles keywords when you can just turn on ours in an hour and have a modern, sleek, natural language search? A search experience that delivers answers, not a bunch of links. We've got extraordinary innovations in search coming out in two weeks, including extractive Q&A document search, a web crawler. I can't wait to show you more about all that. And I look forward to telling you more about it and our vision and how we're going to keep disrupting the huge search category at Investor Day in a couple weeks. We don't know. We don't have a specific date when life will return back to normal. But I'm confident that as industries like retail and food services get back to business, we're going to see our listings product rebound. And meanwhile, our Answers search platform will help us disrupt the huge search category and make keyword search a thing of the past. The founding principle of Yext is that every business and organization in the world ought to be in control of their information online. With our Answers search platform and its incredible powerful, multifaceted solutions, all powered by our knowledge graph, we are well positioned to achieve this goal. Despite a lot of unknowns, I believe we've set up our company for an extraordinary future. Finally, I'd like to congratulate David Rudnitsky on his promotion to President and Chief Revenue Officer. Unifying our global go-to-market under a single leader makes the most sense as we gear up to disrupt the search category with our better, faster, cheaper answers service plan.