Yext, Inc. 10-K

Item 1. Business Overview Yext, Inc. ("Yext" or the "Company") organizes a business's facts so it can provide official answers to consumer questions starting with the business's own website and then extending across search engines and voice assistants. Our platform lets businesses structure the facts about their brands in a database called the Knowledge Graph. Our platform is built to leverage the structured data stored in the Knowledge Graph to deliver a modern search experience on a business’s or organization's own website, as well as across approximately 200 service and application providers, which we refer to as our Knowledge Network, and includes Amazon Alexa, Apple Maps, Bing, Cortana, Facebook, Google, Google Assistant, Google Maps, Siri and Yelp. Our platform powers all of our key features, including Listings, Pages, and Answers, along with its other features and capabilities. We believe a business is the ultimate authority on its own facts, and it is our mission to put that business in control of it, everywhere. The online consumer journey is changing. With the introduction of natural language processing and the growing prevalence of voice assistants and chatbots, search has become more conversational. Consumers are no longer just typing in individual keywords like “mortgage” or “menswear,” but are also using natural language phrases like “wealth advisor near me who specializes in healthcare” and even asking specific, complex questions like “what’s the best menswear store in London that sells dress shirts and is open now?” Web and mobile applications and voice and artificial intelligence, or AI, engines are increasingly answering questions directly and in certain cases providing only one answer unlike traditional web-based search where many results are displayed as a list requiring further exploration. As search continues to evolve, and increasingly leverages AI, consumers are more likely to rely on these direct answers. While consumer online search behavior has changed, the site search experience on many businesses’ websites has not evolved to meet consumer expectations. Numerous site searches are unable to understand natural language queries instead returning a list of links based on keywords rather than direct answers. Poor user experience on a business’s own website may result in lost sales opportunities or may cause consumers to visit a competitor’s website. The challenge for businesses is to understand and provide accurate answers to consumer’s questions while delivering a rich, consistent search experience on their website as well as third-party applications. Many answers and results provided by searches currently come from 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 be incomplete, misleading or incorrect. Yext pioneered a better way for businesses to control and publish the critical facts about themselves to answer consumer questions. We have built our business on the fundamental premise that the best source of accurate and timely information about a business is the business itself. We do this first by empowering brands to structure the public facts about themselves in a database called the Knowledge Graph. The Knowledge Graph organizes data in a way that can answer complex questions by storing both data points themselves and the multiple relationships between data points. Our products and features are built to leverage the structured data stored in the Knowledge Graph so businesses can provide official answers to consumer questions. Businesses of nearly all sizes and in a diverse set of industries can benefit from our platform and capabilities. Yext enables businesses to: • provide direct answers to consumer questions about their business on their own website; • modify, enhance and control the facts about each of their locations, professionals, menus, events or other entities managed with our platform; • update once and disseminate changes to their listings across the most widely used third-party maps, apps, search engines, GPS systems, digital assistants, vertical directories and social networks that consumers rely upon today; • create and update search-optimized landing pages for their locations, professionals and events on their own websites; • encourage consumer reviews for inclusion on their landing pages; and • analyze how features in the platform drive consumer engagement and revenue for our customers. Industry Background Search Results Provide Direct Answers. Search that is powered by AI has grown significantly in recent years. Businesses are now able to leverage search to help consumers discover what they need directly on the search engine results page. Consumers Search Using Natural Language . Consumers are no longer just typing in individual keywords, but are also using natural language phrases and even asking specific, complex questions. Businesses need to be able to understand those questions and answer them accurately and directly. 5 Facts About a Business Are Fundamental. Businesses spend significant sums on developing their brands and creating product and market awareness. When potential consumers reached through those efforts want to make a purchase, businesses need to be able to answer consumers' questions accurately and directly. Inaccurate or incomplete information may result in lost sales opportunities, negative brand experiences and organizational inefficiencies. Search Drives Commerce. When searching for a business, consumers need to know many relevant attributes such as qualifications of a wealth advisor, amenities at a hotel, or course offerings at a university. As a result, businesses must ensure that the facts about their business are available, accurate and consistent online so that they can be found. Moreover, businesses want to make sure that they appear prominently online when nearby consumers search for them. Finally, once a consumer reaches a business’s website ready to transact, the business must be ready to answer the consumer’s specific queries. Managing Facts Online Is Challenging Many businesses lack the capabilities to effectively control, structure and manage facts across the digital ecosystem where consumers discover businesses. This lack of management capability is due to several factors: • Lack of Control of Facts Online. Many answers and results provided by searches currently come from 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 true facts about businesses worldwide. • Attributes that Describe the Facts About a Business Are Expanding. To respond to consumer questions, businesses need to be able to define the facts about their business using detailed, category-specific attributes ranging from name, address and phone number to more detailed items such as whether a hotel accepts pets, a restaurant has a gluten-free menu or a doctor accepts certain insurance plans. • Facts About a Business Are Dynamic. The facts about a business include dynamic attributes that change frequently, such as opening hours, holiday hours, menus, events and promotions. • Facts About a Business Exist in Many Places. With popular services such as Google, Facebook and Yelp, as well as vertical search applications and search leveraging AI using mobile, voice-based and in-app search, businesses need an efficient way to control their facts across these multitude of services. Businesses Need to Provide Consumers with Relevant and Actionable Information. When consumers ask questions about businesses, they expect to be able to quickly find the relevant information they need about those organizations. Furthermore, the increase in the number of mobile users around the world has resulted in the need for business information to be available on the applications where consumers engage and to be presented in a way that is consistent with the language and customs of each geography in which consumers reside. Existing Alternatives Are Inadequate. Traditional methods for managing facts about brands include paper or legacy software-based solutions, such as word processors or spreadsheets. Simply managing and updating information within the few core search engines, such as Google and Bing, through these traditional methods is already very challenging, and becomes even more so when implementing updates on newer services such as Instagram, Snapchat and Uber. Poor Site Search Experience Results in Lost Transactions. While consumer online search behavior has changed, we believe the site search experience on many businesses' websites has not evolved to meet consumer expectations. Many site searches are unable to understand natural language queries and instead return a list of links based on keywords rather than direct answers. Poor site search experience on a business’s own website may result in lost sales opportunities or may cause consumers to visit a competitor’s website. Consumer Reviews Are of Critical Importance. Many major applications include consumer review data in their search results and may rank businesses and professional service providers based on the number, quality and recency of reviews. A limited number of reviews or a few poor reviews without offsetting positive reviews may result in an otherwise lower search ranking in certain applications. Growth Strategy Key elements of our strategy include: • Grow Our Customer Base. We believe that there is a substantial opportunity to continue to increase the size of our customer base across a broad range of industries and companies. In October 2019 with the launch of Yext Answers, our site search product, we further expanded our customer base to include businesses that maintain websites but without physical locations, such as consumer product businesses. We plan to continue to invest in our direct sales force to grow our customer base, both domestically and internationally. • Expand Existing Customer Relationships. We continue to expand our relationships with existing customers. For example, some businesses may initially purchase our platform only for their stores in a particular country with opportunities to expand to other stores in the geographic region. We continue to sell additional features, such as Pages, 6 Reviews and Answers, to existing customers. See "—Sales and Marketing" for a discussion of customer retention and our ability to expand customer relationships. • Expand Internationally. We sell our platform throughout the world and believe there are substantial opportunities to increase sales to customers outside of the United States as well as to help our existing U.S.-based customers manage data for more of their international business. We have an established presence in the United Kingdom, Germany, France, Italy, the Netherlands, Spain, Switzerland, Japan and China and we intend to further expand our footprint to other regions. • Develop and Market New Products and Features. We are committed to developing and marketing innovative capabilities and we will continue to invest in our platform and develop products and features to help our customers better control the facts about their businesses online. For example, in October 2019 we launched Yext Answers, our site search product. In the fiscal year ended January 31, 2021, we expanded Yext Answers into five new languages, French, German, Italian, Spanish and Japanese, and enhanced Yext Answers with two major algorithm upgrades. • Drive Usage of Our Platform. Our customer success professionals are responsible for building relationships with customers, increasing customer’s adoption and engagement with the Yext platform. In the fiscal year ended January 31, 2021, we launched the Hitchhikers program, a comprehensive training program and community for professionals to develop the skills to build custom search solutions for their business using our platform. • Extend the Knowledge Network. We plan to continue to expand our Knowledge Network. In the fiscal year ended January 31, 2021 our Knowledge Network is comprised of approximately 200 applications. We are increasing our focus on adding more industry vertical-specific and international services to our Knowledge Network as well as including new services that may become more commonly used in the future. For example, in the fiscal year ended January 31, 2019 we launched a global integration with Amazon to give businesses control over the answers Amazon Alexa provides about them, and in the fiscal year ended January 31, 2021, we launched an integration with WebMD, while expanding the global reach of the Knowledge Network through multiple integrations with international applications. • Expand Our App Directory. Yext offers integrations with a number of other platforms accessible through the Yext App Directory. These integrations offer our customers the ability to connect Yext with other systems to give customers programmatic control of their organization’s facts. As the number of integrations in the Yext App Directory grows, we believe that it will further expand the ways that our platform can be utilized and increase customer retention. For example, in the fiscal year ended January 31, 2021, we launched the WordPress Answers Connector, a plugin that allows WordPress users to seamlessly integrate Yext Answers into WordPress pages. Key Benefits of Our Platform The Yext platform provides the following benefits depending on a customer’s subscription level and enabled products and features: • Control over Facts. Our platform is the system of record that enables our customers to control and centralize the facts about their businesses, resulting in the elimination of inaccurate and duplicate data and the ability to seamlessly update data across our Knowledge Network. • Flexibility for Optimized Management of Business Attributes. Our technology enables businesses to develop structured data that suits their business needs and is optimized for search and discovery. Our platform gives businesses the ability to organize, edit and update the facts about their business based on numerous standard attribute fields, such as address and hours of operation, and increase the depth of their data using our extensible custom fields, such as menu options or accepted insurance plans. • Direct Integrations with the Most Relevant Services. Our platform, coupled with our Knowledge Network of approximately 200 maps, apps, search engines, intelligent GPS systems, digital assistants, vertical directories and social networks, provides our customers with the ability to update their information and content across this network with a single click. • Increased Discoverability and Conversions. With structured data stored in the Knowledge Graph coupled with the applications in our Knowledge Network, our customers provide search engines and voice assistants with the data they need to answer questions about their businesses. By providing accurate and direct answers to questions and guiding consumers to transact directly from search results, we believe businesses are able to capture, convert and retain more of their customers. • Create and Manage Compelling Landing Pages for Consumers at Scale. Yext Pages enables businesses to create and manage compelling landing pages on their website at scale using the Knowledge Graph. When data is updated on a business’s Knowledge Graph, Yext automatically publishes the changes to a business's website, so that the most accurate, up-to-date answers are available to customers on and off a business's website. 7 • Ability to Drive More Reviews and Increase Consumer Engagement. Yext Reviews helps our customers to gather additional genuine consumer reviews and add those reviews to a customer's website as well as monitor and respond to reviews posted across the Knowledge Network. • Ability to Perform Advanced Analytics. Our platform's advanced analytics inform businesses about their digital public presence and consumer interactions on their Yext Listing, Pages and Answers experiences that can drive customer revenue. • Reduced Support Costs. Yext Answers helps consumers find information quickly and easily on a business’s own website without having to contact a support center or chatbot. • Global Reach and Local Expertise. Our platform integrates with both global and country-specific search engines and applications, accepts international address and phone number data, and allows local employees to contribute individual expertise, providing a consumer experience that respects local languages, address formats and customs. The Yext Platform Yext's cloud-based platform powers products and features that allow our customers to provide accurate and direct answers to consumer questions, to control the facts about their businesses and the content of their landing pages and to manage their consumer reviews, all from a single login. From our platform customers can centralize, control and manage data fields, including store information such as name, address, phone number and holiday hours; professional information such as headshot, specialties or education; job information such as title and description; FAQs and more. Our customers can then use this data to answer consumers' questions, to power and update their landing pages and to make this information available through our Knowledge Network of approximately 200 maps, apps, search engines, intelligent GPS systems, digital assistants, vertical directories and social networks in a complete, up to date and accurate manner. The key products and features that comprise the Yext platform include: • Listings . Listings allows our customers to sync and update the content they store in the Yext platform across our Knowledge Network providing customers with greater control and consistency over their brand. • Pages . Pages enables businesses to create landing pages on their website to capture traffic from search engines and establish a call-to-action for consumers who reach those pages. • Answers . Answers delivers a natural-language search experience on a company’s website and other digital properties, where consumers can search a company’s Knowledge Graph and get direct answers in the form of knowledge cards, maps and other relevant results. Our platform contains various other features. Reviews enables customers to encourage and facilitate reviews, thereby increasing the quantity and quality of the reviews available to potential consumers and provides tools to manage their reviews from multiple sources across our Knowledge Network from a single location. Analytics provides businesses a holistic view of where and how consumers interact with their brand both on their own websites and on third-party applications as well as insight into consumer interactions on their Yext Listing, Pages and Answers experiences that can drive customer revenue. Ultimately, our platform helps businesses deliver accurate, consistent, up to date and compelling information to consumers. In September 2020, Yext announced the general availability of Hitchhikers, a comprehensive training program and community for professionals, who use Yext. With the launch of Hitchhikers, professionals are now able to build custom search solutions for their business using our platform. We continue to invest in platform and features development to help our customers better control the facts about their business and have released new products and features to all of our customers multiple times a year. Our Technology Our cloud-based platform is designed to scale as we continue to add customers and allows us to support the entities managed with our platform and the millions of associated facts. The platform is built primarily with industry-standard open source technology. We use a microservices-based architecture to maximize the manageability, flexibility and scalability of our software as it continues to grow more complex. We also employ a modern continuous delivery approach to building, testing and deploying our software. Hosting The majority of our customer-facing software is run from two co-location data centers. To provide the highest level of up-time and lowest latency for our platform capabilities, key high-volume services are hosted by third-party hosting services, which allows easier and greater scalability and provides for redundancy. Data Structure The Yext platform allows customers to collect, store and manage structured data, consistent with standards published by schema.org. Schema.org is an open and collaborative initiative launched by certain large search engines that defines the vocabulary 8 and format for structured markup. Search engines like Google and Bing consume data through structured markup placed in the underlying code of web pages. We actively monitor and track the schema.org standards so that our platform stores and publishes data in accordance with the most current schema.org specifications. Integrations with our Knowledge Network and App Directory The functionality of our platform is dependent on integrations with a variety of third-party technologies that comprise our Knowledge Network and App Directory. For example, we rely on integrations with each of the applications in our Knowledge Network to accomplish some or all of the following key tasks with members of our Knowledge Network: • search for existing listings and retrieve details about them, in order to match our customers’ data in the Knowledge Graph to existing listing data; • claim listings and deliver updated content; • retrieve or get notified about reviews and allow review response; and • obtain statistics about traffic on listings to display to our customers in the platform. Yext’s integrations through its App Directory offer our customers the ability to connect Yext with other systems to enable customers to accomplish key tasks including the following: • powering chatbots with data stored in the Knowledge Graph; • joining insights from Yext with other platforms to perform deeper business analysis; • optimize marketing campaigns with location data stored in the Knowledge Graph; and • optimize scheduling and appointment bookings. Over the years, we have developed special integrations with a number of the applications in our Knowledge Network and App Directory. We have also worked with the major application providers to develop trust and strong working relationships, resulting in specific operational workflows, processes for issue resolution, and specialized technology and processes tailored to the nuances of each. For smaller application providers, we have developed our own application programming interface, or API specifications that each provider builds and implements for integration with our platform. Our Customers We serve businesses with locations throughout the world. These include many leading businesses in a diverse set of industries, such as healthcare, retail and financial services. For this purpose, we define a customer as a separate and distinct buying entity, such as a company, a government institution, a franchisor, a service provider or agency or a distinct business unit of a large corporation that has an active contract directly with us. No single customer accounted for more than 10% of our revenue for the fiscal years ended January 31, 2021, 2020 and 2019, respectively. Customer Support Our customer support group responds to inquiries about the use of our products. We provide basic customer support as well as premier customer support, which may include services such as priority access to technical resources, faster target response times and other additional support services. As the Yext platform can be used by a number of different roles throughout the organization, for an additional fee, we also offer field user support which includes one-on-one training, review of content based on brand guidelines, and other support services. Professional Services We offer professional services to customize our platform for our customers. Our professional services teams comprised of project managers, engineers and design experts offer various services including custom built landing pages and data integrations as well as ongoing maintenance and services. Sales and Marketing We sell our platform throughout the world to customers of all sizes, including our enterprise, mid-size, and third-party reseller customers. In transactions with resellers, we are only a party to the transaction with the reseller and are not a party to the reseller’s transaction with its customer. We are also developing programs comprised of technology companies and consultants to promote the Yext platform to their customers. Our sales organization varies by market within each country and will change over time as we build critical mass and address various verticals within a market. Our quota-carrying sales representatives were approximately 250 at both January 31, 2021 and 2020. 9 We offer annual and multi-year subscriptions to our platform. Revenue is a function of the number of customers, the number of licenses or capacity purchased by each customer, the package to which each customer subscribes, the price of the package and renewal rates. Our subscriptions are offered in a discrete range of packages, with pricing based on specified feature sets and the number of entities managed on our platform, such as locations, persons and events among others. We refer to these locations, persons, and other entities collectively as “licenses.” Our packages start with basic access to the Knowledge Graph and successively include access to additional capabilities at a higher cost. During the fiscal year ended January 31, 2021, we offered unbundled products for our enterprise and mid-size customers enabling them to purchase each of our products separately rather than in packages with pricing based on capacity or licenses. Our marketing efforts are focused on promoting our brand and generating demand for our products. We use a variety of marketing programs across traditional and social channels to target our prospective and current customers. Our primary marketing activities include integrated marketing campaigns, sponsorships of leading industry conferences, and thought leadership such as webinars, whitepapers and blog posts. Research and Development Our global research and development organization is responsible for the development, design and testing of our platform as well as APIs that facilitate the integration of our platform with third-party applications. Our research and development team uses and shares the same technology, platform development tools and data across various sites. We have and will continue to invest in our research and development team to enable the release of new products and features multiple times a year. Intellectual Property Our intellectual property is an essential element of our business. We rely on a combination of patent, trade secret, trademark, copyright and other intellectual property laws, confidentiality agreements and license agreements to protect our intellectual property rights. We also license certain third-party technology for use in conjunction with our platform. We believe that our continued success depends on hiring and retaining highly capable and innovative employees, especially as it relates to our engineering base. It is our policy that our employees and independent contractors involved in development are required to sign agreements acknowledging that all inventions, trade secrets, works of authorship, developments and other processes generated by them on our behalf are our property and assigning to us any ownership that they may claim in those works. Despite our precautions, it may be possible for third parties to obtain and use without consent intellectual property that we own or license. Unauthorized use of our intellectual property by third parties, and the expenses incurred in protecting our intellectual property rights, may adversely affect our business. Patents and Patent Applications As of January 31, 2021, we had twelve issued U.S. patents, twelve non-provisional and two provisional U.S. patent applications, four international Patent Cooperation Treaty patent applications pending, and nine national stage applications outside of the U.S. The issued patents have expiration dates ranging from 2032 to 2037. Although we actively attempt to utilize patents to protect our technologies, we believe that none of our patents, individually or in the aggregate, are material to our business. We will continue to file and prosecute patent applications when appropriate to attempt to protect our rights in our proprietary technologies. However, there can be no assurance that our patent applications will be approved, that any patents issued will adequately protect our intellectual property, or that such patents will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Trademarks We rely on registered and unregistered trademarks to protect our brand. As of January 31, 2021, we had 135 trademarks registered globally. “Yext” is a registered trademark in the United States and in certain other countries. Competition The market for our platform is new and rapidly evolving, and we face many competitors with a variety of product offerings. Our competition comes from businesses that choose to manage their online, public-facing data in-house using manual, paper and spreadsheet-based systems that corporate personnel employ in a fragmented manner rather than pay for a third-party product or service. In addition, other companies may offer products and services at lower price points than us or that compete with some of the features present in our platform. As we develop our platform, we will introduce products and features that compete in new markets and as a result we will face more established businesses in these markets. For example, in October 2019 we launched Answers, our site search product, which competes with other site search products. As we introduce new features and our existing platform evolves, or as other companies introduce new products and services, we may become subject to additional competition. We believe that we generally compete favorably with our competitors because of the size and breadth of our integrations and relationships with the applications in our Knowledge Network, the features and performance of our platform, the ease of integration of our platform with the technological infrastructures of our customers and the incremental marketing benefits and return on investment that our various products and features offer to our customers. 10 Human Capital We consider our culture and employees to be vital to our success. Yext is committed to providing a safe, productive, discrimination-free and harassment-free work environment. All employees are responsible for compliance with our Code of Conduct and Employee Handbook, which includes our anti-harassment policy. These policies and practices help us foster a workplace environment that promotes inclusion and diversity. We also support seven employee resource groups, or ERGs, that are led and founded by employees with a senior executive sponsor. ERGs provide a community for underrepresented groups and their allies and offer professional development and mentoring opportunities. In the fiscal year ended January 31, 2021, the Company made a greater commitment to diversity and inclusion by hiring a senior diversity and inclusion manager to develop and implement diversity and inclusion strategies to improve our recruitment process, performance management, leadership development, employee engagement and retention. To attract and retain highly capable and innovative employees, we have developed competitive compensation packages and benefits programs. Our compensation packages include market-competitive pay, an Employee Stock Purchase Plan, healthcare and retirement benefits, paid time off and family leave and flexible work schedules. We also offer broad-based equity awards with multi-year vesting provisions to incentivize and reward our employees for long term corporate performance based on the value of our common stock and promote retention throughout the vesting period. We have invested resources to develop employee talent. Upward, our rotational program, offers analysts early in their careers the opportunity to rotate through three functional areas to gain an understanding not only of how our platform and systems work, but also how our customers interact with our products. In addition, we conduct an annual employee survey to gauge employee engagement and identify areas of focus. To support our employees in the fiscal year ended January 31, 2021 and to promote their health and safety, we temporarily closed our offices requiring all of our employees globally to work remotely. We invested resources in supporting our employees in a shift to remote work, including offering all employees a stipend for supplemental home office equipment and supplies. We provided two weeks of emergency family leave for employees to take care of a child or parent due to COVID-19 disruptions. To help mitigate the financial impact of COVID-19 on certain employees in our sales organization, we offered to advance a portion of the employee’s target commission during the fiscal year ended January 31, 2021 and modified certain quota targets. As of January 31, 2021, we had over 1,300 full-time employees, the majority of which are based in our New York headquarters. Governmental Regulation We are subject to governmental regulation and other legal obligations, including those related to privacy, data protection and information security. Compliance with such laws and regulations could, individually or in the aggregate, increase our cost of doing business, impact our competitive position relative to our peers, and otherwise have an adverse impact on our operating results. For additional information about the impact of government regulations on our business, see "Risk Factors—Risks Related to Laws, Regulation and Taxation" in Part I, Item 1A in this Annual Report on Form 10-K. Additional Information We are a Delaware corporation with our headquarters located at 61 Ninth Avenue, New York, NY 10011. You can access our website at www.yext.com and our investor relations website at http://investors.yext.com. Our telephone number is (212) 994-3900. Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are available, free of charge, on our investor relations website as soon as reasonably practicable after we file such material electronically with or furnish it to the Securities and Exchange Commission, or the SEC. The SEC also maintains a website at http://www.sec.gov that contains our SEC filings. None of the information contained on, or that can be accessed through, our website, our investor relations website or the SEC's website is part of this Form 10-K nor is such information incorporated by reference herein. 11