Good afternoon and welcome to the Yext fourth quarter fiscal 2018 earnings conference call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to James Hart, Vice President of Investor Relations. Please go ahead.

Thank you, Phil, and good afternoon, everyone. Welcome to our quarterly conference call. With me today are Howard Lerman, CEO of Yext; Steve Cakebread, CFO and Jim Steele, President and Chief Revenue Officer. As a reminder, this call cannot be taped or otherwise duplicated without the company's prior consent. Before we begin, I would like to remind everyone that this call may contain forward-looking statements, including statements about revenue and non-GAAP net income guidance, our industry outlook, market opportunities, business performance, financial outlook 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, industry, product development, market opportunities and general economic and business conditions. These statements reflect the company's current expectations based on its beliefs, assumptions and information currently available to it. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement 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 report on Form 10-Q and our press release that was issued this afternoon. During the call, we will also refer to non-GAAP financial measures. Reconciliations with the most comparable GAAP measures are also available in the press release which is available at investors.yext.com. With that, we will begin by turning the call over to Howard.

Thank you, James and thank you everyone for joining us today. We had a great quarter, achieving record revenues. And just a few of the other highlights, revenue grew 35% over the fourth quarter of last year, which was at the high end of our guidance. Over the full year revenue increased 37%, this is consistent with our growth rate in fiscal 2017, but it comes against a much larger revenue base this year. Full year gross margins of 74.1% the highest it’s ever been in any year and an increase of nearly 400 basis points from fiscal 2017 and we closed the year with $89.5 million in deferred revenue, that’s a 57% increase from the year ago period. These results reveal the clear momentum we are seeing in the market. Leading brands from around the world are selecting Yext because they understand the transformation that is taking place that is the rise of AI powered services delivering structured answers at the exact moment of intent replacing blue links to a website. The results we deliver are staggering. Last year alone Yext customers in aggregate saw 589 million page views, 590 million phone calls, 1.45 billion driving direction requests and 148 billion search impressions. The world is waking up to the power of digital knowledge management. We won nearly 80 new enterprise logos just this quarter alone. Brands like Jack in the Box, Dairy Queen, State Employees Credit Union, Americare, VCU Health, Mediamart that’s Europe’s largest electronic retail and in Germany the BMW Group in Central and Southeastern Europe. And we added more than 200 new enterprise logos over the past fiscal year. We signed renewals recently with brands such as TIAA one of the world’s largest financial service providers, Kruger the largest super market chain in the United States,…

Thanks, Howard. The revenue team had a terrific finish to the year. As many of you know the fourth quarter is a very important time in software, because that’s when many customers are setting their budgets for the upcoming calendar year and planning their IT purchases. So we tend to see a lot of new business and a lot of new renewal activity during this period. You were seeing this through the substantial increase in our deferred revenue and the record number of new logos we added in the quarter. In fact this quarter we closed a lot of high quality wins with major brand names that are known all over the world. And we also had great success renewing existing business with key accounts. So we’re really excited about the road ahead for us in fiscal 2019. We see opportunities to grow everywhere we look, we believe we are underpenetrated in every geography we are in, in every vertical category we serve, and in every existing customer relationship. We will continue to look to grow from a combination of new customers by expanding our relationship with existing accounts. This is particularly true within enterprise and mid-market, which are key areas of focus. It’s been about a year since I joined Yext and during that time we’ve accomplished a lot. We build our revenue leadership team with key hires in the U.S. for enterprise midmarket and small business. In Japan, in Europe and by adding practice leaders in verticals we want to specifically target such as financial services, food and health. We fine-tuned our sales enablement process to be more like best in class software sales organizations. We upgraded our training process and improved the ongoing resources available to sellers to help them close deals. We finished the year with…

Jim, thank you. As you know we closed out the year with another strong quarter and are pleased with the results. Revenue for the quarter was $48 million and was at the high end of our guidance and reflects an increase of 35% over fourth quarter last year. When you exclude the impact of small business, revenue grew 40% as compared to the fourth quarter a year ago. For the full year, revenue grew 37% to $170.2 million. Again when you exclude the impact of small business, which is flat in fiscal year 2018. Full year revenue grew 43% compared to last year. Keep in mind small business made up about 10% of our revenue this year, and declined from 14% last year. This year our growth came from a mix between new and existing customers, with existing customers we continue to see healthy levels of growth due to both upsells as well as expanded license accounts. As we told you last quarter, a merger between two large reseller partners was expected to negatively impact our near-term retention metrics. And we saw this impact as our net revenue retention finish the year at 109%, which is slightly below our historic levels. Keep in mind our enterprise and mid-market customers remain at a more normal levels. And also understand that this retention metric is on a trailing 12 months calculation. So it will take a bit of time to get back to our normal ranges. Deferred revenue increased 57% from the year ago quarter to $89.5 million, which as Howard said, is our highest level ever. This was an increase of almost $30 million from October and reflects impart a reduction in monthly terms in favor of quarterly and semiannual billing terms. As of January 31, our customers are managing more…

Thank you, Steve. I want to close today’s call with a quick update about our annual user conference onward. We set a new record last year with over 500 attendees and key notes from Amazon and Google and Microsoft among others. And many of our customers including ComCast, Marriott, Volvo and RVs to name just a few shared their stories of success in working with Yext. This year we expect to more than double in size with 1,200 attendees and to accommodate the additional demand we just announced ONWARD18 will be held at the JAZZ at Lincoln Center’s, Fredrick P. Rose Hall in New York City, the event this year starts on October 23rd. We invite investors to join us. Go to ONWARD18.com for the latest information. And with that, I will turn things over to the operator to begin the Q&A session.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Brent Bracelin with KeyBanc Capital Markets. Please go ahead.

Hi, this is Alyssa on for Brent. With the really strong deferred revenue and billings I was hoping you could kind of help us walk through really how much of that is relate to enterprise, mid-market kind of momentum that you’re seeing? And then kind of splitting out what’s kind of the change in billings terms?

Yes, that’s a good question Alyssa. We haven’t broken out mid-market and enterprise mostly because enterprise dominates the business right now. As you know we just hired a team to start in mid-markets the middle of last year. So it’s predominantly enterprise that's driving that growth for Q4. It's also true that we have a mix of billing terms between monthly, quarterly semi-annual and annual. And I think one of the things of note that helped increase deferred revenue was removing more and more off of monthly billing terms. So that helped a lot. But we haven't given that mix because it moves around based on the deals that we do and the customers that we have. And yes, it's a generally good quarter for deferred revenue and we're excited about the delivery of the performance we had.

Okay. So the strength is kind of the mix between the two are not fully one of the other….

Yes, we had a really -- as Jim said, we had a really strong business quarter, but at the same time, we are working on changing our mix as part of improving our cash flow from operations.

Okay, great. Thank you.

Thanks.

The next question comes from Alex Zukin with Piper Jaffray. Please go ahead.

Yes, hey guys, congrats on a good quarter. Just two questions for me. So I wanted to ask in terms of enterprise sales productivity how that's ramped versus your expectation. And Jim, you mentioned kind of 16% sort of account. And I guess that with the target being 20%, is that a target we expect to achieve at the end of this calendar year or is that something that will take couple of years to get there? And then that one follow up for Howard.

Jim, you want to take that question?

Sure, can you hear me okay? Yes, so Alex, you guys can hear me right, just want to make sure.

Yes.

Yes, okay. We added a lot of capacity, I think Steve mentioned the final number that we ended up with on the rep side. I think…

131 total number.

Yes, we ended up at 131 and Alex you'll remember from a year ago during the IPO Roadshow we've talked about we were at 100 at that point. So we added 31% capacity on the mid-market and enterprise side. And yes, our target was to get to 20% we ended up at 16%. And some of that was just some churn that you'd expect. But our goal is still to hire aggressively. And we want to achieve that 20%. We have that as our objective. And we will still strive to get there. And the hires and we're seeing a lot of really strong hires, candidates people, that have come in with lots of experience. They have industry experience, they have relationships already in big Global 2000 accounts. So we're really happy with the hiring and the mix and profiles that we're bringing in. And we want to do more, we want to keep going. So that's our goal.

Got it. And then Howard, you mentioned in the script that you're seeing this market moving from [indiscernible] to maybe beyond that. And you noted a few RFPs, I guess, can you maybe talk about what drove those RFPs specifically with the competitor displacement, customer flexibility or some other tipping points. And maybe as you look at your pipeline for this year, how many of those activities in the pipeline do you foresee being RFP&H versus that you saw?

Alex, our great opportunity and our great challenge is that we are building a category. Digital Knowledge Management, DKM. We're the pioneer in this category, we have the best technology, we've seen the opportunity, we're the ones that are the leaders. It's really huge opportunity. And the reality being first mover is that as you pointed out we originally had to be evangelical. But now every day, we are benefitting from the platform shift. The rise of AI powered services like Siri and Google Assistant and Alexi, and all these different personal assistant people use. And the staggering stats we shared the results of getting 1.45 billion driving direction request or 148 billion search impressions. This shows that the consumer experience is shifting, it’s shifting away from a world of blue links and websites and unstructured content to a world of smart answers and structured information. The coolest thing is that that experience is experienced by all of us every day, by all of our customers every day. And CMOs are smart, they know where their customers are, they see that their customers are using Google Assistant. They see that their customers are on third-party services, and they can see it quantitatively not just qualitatively from what they, their friends, their kids, their customers use, they can also see it quantitatively in their own stats. We have the stats set to back that up. Our opportunity is to create this category. And so we've started to see the world is waking up. That folks are begging to see the power of digital knowledge management, the results back it up, the T-mobile story, the stats that we see from our customers, the logo as we broad on, we added 230 logos over the year, 80 in the quarter. So, it's becoming not a nice to have, but a need to have, we see an intelligent future where every company in the world, that has a website today needs to structure those facts, build the knowledge graph and put that into intelligent services everywhere.

Okay. The next question comes from Mark Mahoney with RBC Capital Markets. Please go ahead.

Hi, good afternoon. It is Zachary Schwartzman on for Mark. Two questions, the first is you mentioned there were roughly 80 net ads for enterprise accounts. Do you have a total of customer account, you can share with us at year-end, is that in 10-K? And second is, can you share with us a range of the percent of enterprise accounts who have added the Knowledge Assistant already? Just trying to get a sense of how long that adoption runway is and how quickly it is ramping? Thanks.

We haven't share the customer account, but I'll take the question about Knowledge Assistant. We're really excited about this feature, it’s a AI powered chat -- essentially like a chat box that you can SMS or use Facebook messenger for the business user could text and updates Knowledge Manager. Historically in order to make an update to your profile photo or attribute or a menu item within Yext, you had to log into a web app that looks a lot like any cloud based application like sales force or anything used and make your update and save it and then boom it publishes everywhere. With Knowledge Assistant a restaurant owner or an individual insurance agent or a wealth adviser can simply from the palm of their hand with SMS text in and update into Knowledge Assistant. That's the feature that you’re referencing, that's how it works. We had a Webinar a couple weeks ago to really begin to promote this feature to our customer base and we saw a lot of people come to this webinar use it and I'll give you one specific example, which is on Presidents Day, remember Knowledge Assistant doesn't just accept inbound request it’s also intelligent and proactively reaches as out when it thinks you ought to be doing something with your digital knowledge. And so one of the big challenges customers have is keeping their holiday hours updated. And Presidents Day it was I think a couple of weeks ago in many of the world businesses have different hours on Presidents Day. I know we did here at Yext. Now Knowledge Assistant reached out to all the customers that had not specifically set their hours for Presidents Day and said hey you’re marked today as open, on Presidents Day, are you really hoping today. And we saw a very large response rate from that, way larger than when we have sent an email about that kind of thing before. So this is just removing the friction to getting more knowledge into Yext and that's ultimately is reflected first in that 40% change that we saw last quarter and attributes one of our highest quarters ever in terms of percentage of the attributes that changed. And of course the total number of attributes that changed that we have under management as well, which I think is now 29 million.

Thanks, Howard. Very helpful.

Okay. The next question comes from Stan Zloty with Morgan Stanley. Please go ahead.

Hi guys, this is Hamza Fodderwala in for Stan Zlotsky. I just had a quick question on the Q4 billings number again. How much of that would you attribute to strengthen the new wins that you saw and existing customers moving up to that ultimate package?

Well, we don't give out the billings number, we talked about deferred, I know you guys calculate it. We clearly had a really strong Q4 in all manner. I mean, we up sold, we added new locations, we got new logo. So I think that's reflected in the numbers that you are seeing from us that you might calculate obviously when we have a shift out of monthly billing to more quarterly and semi-annual that's going to help the calculation as well. But I think to Howard's point, people are now starting to see the benefit of what we do. And they are going to start to do better in terms of buying the product and moving us there. To upgrade to ultimate, to upgrade any of other products, takes a while, because we get into renewal cycles. You have to keep in mind a lot of these new products are just six to nine months into it. And so there is still education in getting the chance to upsell of it. I think we're seeing a lot of people get a lot more interest in what we are doing and looking at what products and offerings we have that will benefit them going forward. I don’t know you have anything else, Howard.

I would just add that, I think around the time of our IPO a year ago, we said we had less than single-digit penetration to our ultimate package today, we are saying hey that’s up to 20% and we also added 80 new logos in the Q. So, between those two pieces of data, you can see there is no single thing that’s happening, its continued underlying strength that we are seeing as the world moves to understanding digital knowledge management, the power of what it brings relative to unstructured test on a web page.

And if I can just back one or two questions. That’s why we are getting into RFPs because not that there is competition, but we are getting into bigger and bigger accounts and their procurement process is just part of that requirement. So there is no new entrance here, it’s just that we’re starting to penetrate into meaningful accounts that their procurement process requires an RFP regardless of what their volume.

Okay, and maybe just a follow-up question, maybe this one is for Jim, a few times during the top of the call you mentioned more shift to focus on verticals, we have obviously looking seen companies like salesforce.com be very successful on that vertical selling of strategy. How important is this for the sales force going forward?

Yes, it’s very important, we have a great solutions for the food, services business and we have seen tremendous success there and we have got -- we’re organizing more around food for example, healthcare is another very strong category for us, we’ve got a team there. We also have an industry leader who is thought leader in food, healthcare and financial services that can speak the language of our customers and talk about our thought leadership there. So I view it as really important and this is a big shift that we’ve made as a selling organization, the last year as we see the success we’ve had in those three industries in particular. So I would tell you that that’s an important part of our growth strategy.

I would like to add something to that too. To say, hey, it’s not only just an important part of our sales strategy, it’s really important part of our product strategy. If you look at every vertical, they all have their own unique entity types, in the healthcare industry you have physicians and facilities, in the food services industry you have menus, you have restaurants. These entities have different types of attributes that a customer needs to define and managed in the cloud and then sync to intelligent services to drive their presence at that exact moment of intent. In the financial industry, you have a wealth advisor, an insurance agent. You have ATMs which we just unveiled last quarter. Every time we go into a new industry, not only can we take an industry specific sales approach, we have a customized product offering that lets our customers manage that unique type of entity within their business, it also gives us more license type to sell to them, so that we don’t just had restaurants to sell to the food service industry we can also sell menus. It also increases our ability to push that knowledge about them, out into a series of vertical sites. We’ve said in our food services, Yext for Food vertical, we now have Postmates, and Zomato all these transactional places, you can imagine if you are a restaurant owners and you got your menus up on all these different places, that people are ordering off of live transactions and you want to change the menu -- you want to have a soup of the day or change something or you ran out of something, you can just from Yext update that information and boom it’s pulls or changed across not just horizontal sites, but vertical sites too. Digital knowledge management needs to happen in every vertical around the world, every vertical has unique entities, every vertical has unique sites, it’s our goal to help get our customers everywhere, their customers are going to be looking.

Thank you.

And our last question comes from Mark Murphy with JP Morgan. Please go ahead.

Mark, your line might be on mute, we are not hearing you.

Pardon me, Mark, your line is now open.

Hi, can you hear me now?

Yes.

Sorry about that, yeah, this is Matt Hawsa [ph] on behalf of Mark Murphy. So you guys had a nice uptick in gross margin year-over-year in Q4, could part of that increase be attributed to an increase in ASPs?

No, ASPs you know we’ve said this before, we don’t anticipate increasing ASPs as part of our go forward growth rates right now. What it is attributed to it is we're growing scale, we're bringing on publishers predominantly that we no longer have to pay for. And those that we do the cost per transaction is getting better. So as you see us scale, you're going to get some of that lift in gross margins. Now we've also said that the gross margins are going to start normalize into the mid-70s and that has to do with the fact that we're doing more professional services, we've got more data centers, we're expanding all those. So there is no expectation that gross margins continue to rise, but we are starting to see a more normal gross margin going forward. But that lift has come predominantly because publisher costs have started to become really efficient and scalable on our side.

Got it, thank you. And then on the increased number of quota carrying reps with the experience selling at the enterprise level. Where are these reps coming from in general? Is it like the Oracles or they are more like the sales forces of the world?

Jim, you want to take that?

Yes, all of the above. Any SaaS company, that has had a high growth experience. We're seeing a lot of people coming from Adobe. You mentioned the other two, I don't want to -- we're not targeting any company. There is just sales people have a way of being attracted to high growth company. So we're -- and with all of our leadership that we've hired in the last year we have a lot of great contacts out there. So we're definitely pulling them in from all over the SaaS world. And what we're looking for as people that have great track record of growth. They've got relationships that they bring in. They also have other people that would follow them, that sales people like to go to companies where they know the leadership and they trust them. And so, yes, we're hiring them from all over the place.

Got it, thank you. And then finally -- by the way thanks for the update on the Dex and YT. Do you have any feeling for if there would be more consolidation in the partnered channel or anything you're hearing along that front?

Not at this time. I mean that's something most companies talk much about. I think we have an excellent relationship with Dex YP, the transitions have gone smoothly both for them and us. And feel that there is a really strong relationship going forward with those guys. But it's hard to...

And it's not like there is a whole bunch of other big ones out there…

Yes, they are going to emerge anyway. But that stuff shows up after the fact in terms of people knowing.

Sure, thanks very much.

This concludes our question-and-answer-session. I would like to turn the conference back over to James Hart for any closing remarks.

Well, thank you everyone for joining us today. We look forward to speaking with you again in a few months' time after the first quarter results. Thank you.

Thank you everybody.

Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.