Yext, Inc. (YEXT) Q4 2021 Earnings Call Transcript

Yext, Inc. (YEXT 0.36%)
Q4 2021 Earnings Call
Mar 03, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon. And welcome to the Yext fourth-quarter fiscal 2021 financial results conference call. [Operator instructions] 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.

Yuka Broderick -- Investor Relations

Thank you, Gary, and good afternoon, everyone. Welcome to Yext 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 would like to remind everyone that this call may contain forward-looking statements, including statements about revenue, non-GAAP 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 nonhistorical 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 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 GAAP 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.

Howard Lerman -- Chief Executive Officer

Thanks, Yuka. 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, its 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 Yext Answers. 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-GAAP 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, and 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 almost empty. 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 Answers 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 Yext 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 lengths. We've got extraordinary innovations in search coming out in two weeks, including extracted 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 of 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 would 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 the search -- to disrupt the search category with our better, faster, cheaper Answer search platform. David?

David Rudnitsky -- President and Chief Revenue Officer

Thanks, Howard. I'm excited to be leading the team as we look to scale Yext to much greater levels in the years ahead. Given the continued challenging environment, we had a solid Q4. We saw renewed strength in EMEA, following a tough beginning of the year due to their strict lockdowns, and a solid second half for mid-market.

Our enterprise team fought hard in a tough macroeconomic environment. The total number of Yext direct customers, which excludes SMB and third-party resell customers, increased 21% year over year to over 2,400. We're introducing a new metric for investors this quarter, which we believe is a good indicator for our business and our progress with larger customers. Our direct customers, excluding SMB and reseller, with ARR over $100,000, totaled 550 at the end of Q4, up 12% year over year.

This metric is replacing deals closed after this quarter. In Q4, Yext overall closed 216 new and renewal deals with at least $100,000 of total contract value. This includes 22 deals with more than $1 million of total contract value. We ended the fiscal year with nearly 250 quota-carrying reps, roughly in line with our target of 255.

Our new logo signings included La Poste, the French national postal service; Endeavor, Casio Computer and Popeyes. Financial services, including insurance, showed continued strength for the year with up-sells from J.P. Morgan Chase, Liberty Mutual and Farmers. Other up-sell deals during the quarter included UnitedHealthcare service and Accor Hotels, as well as Panera.

We're cautiously optimistic about our opportunities with food services companies when businesses begin to reopen. Renewal deals included AT&T and Luxottica. We continue to see momentum with Answers site search. As Howard mentioned, we closed 130 Answers-led deals in Q4, which included the first-quarter significant contribution from EMEA and Japan, following the release of Answers in Spanish, French, Italian, German and Japanese in the summer and fall.

Answers site search continues to open up the door with use cases and significant opportunity with new companies that we haven't sold to previously. I want to tell you a little bit about our six-figure deal with CoinMover this quarter. CoinMover runs a network of cryptocurrency ATMs, providing its customers with a simplified and safe experience for buying and selling digital currencies. They wanted to make sure that customers can find the right information about CoinMover across the Internet.

So they bought Answers to answer customer questions on CoinMover's website. And they bought listings to provide information about their network of physical ATMs in New England and the Pacific Northwest. CoinMover is seeing tremendous value from our partnership with us. They're seeing a significant boost in their website engagement and conversion rate by leveraging Answers on the site.

And in the past 90 days, Yext has driven an 83% increase on their google search impressions and a 41% increase in Get Directions clicks. We're pleased to be partner with the company in this rapidly growing space. I've never been more optimistic about Yext's long-term future than I am right now. We have a great team and a platform that drives demand from a diverse group of clients and prospects worldwide.

We believe we are well-positioned to capture that demand as it materializes. I couldn't be more excited about the opportunity ahead and the team fueling our growth. With that, I'll turn the call over to Steven.

Steve Cakebread -- Chief Financial Officer

Hey, thanks, David. As Dave said, we had a solid quarter: revenue above our guided range, achieving breakeven for the first time ever on a non-GAAP EPS basis, positive operating cash flow and continued improvement in sales and marketing efficiency. I just want to thank the finance and IT teams who are executing incredibly well and delivering these results in a challenging work environment and setting us up for economies of scale as the economy recovers. We're really well-positioned for growth going forward.

Our fourth-quarter revenue grew 13% year over year to $92.2 million. Fiscal-year '21 revenue grew to $355 million, which is an increase of 19% over last year. Unearned revenue increased 8% year over year to $192 million. And annual recurring revenue, or ARR, at the end of Q4 was $354 million, and that's up 8% year over year from the year-ago quarter.

Our trailing 12-month net dollar-based retention, which excludes our small business customers, was 102%. And our trailing 12-month net dollar-based retention for direct, which also excludes small business and our third-party reseller customers, was 103%. Our retention in Q4 was impacted again by muted up-sells in this tough macro environment. Before turning to margins and expenses, I would just like to note that I'll be discussing non-GAAP results, unless I otherwise say.

And we provided, as Yuka's mentioned, a reconciliation of GAAP to non-GAAP financials in our earnings release. So Q4 gross margins were 78.4% this quarter. That compared to 75.7% in the year-ago quarter. This increase in margin was primarily driven by leverage on employee costs and publisher fees and was partially offset by higher data center costs.

Fiscal-year '21 gross margin was 77.3%, and that compares to 75.6% a year ago. Q4 operating expenses were $73 million or 79% of revenues, and that's down from $75.3 million or 93% in the year-ago quarter. We continue to execute on cost management and efficiencies this quarter and drove year-over-year margin leverage in each of our opex line items. Sales and marketing expense decreased as a percent of revenues from 61% in Q4 fiscal-year '20 to 54% in Q4 fiscal '21.

G&A expense decreased as a percent of revenues from 19% in Q4 last year to 15% in Q4 this year. Compared to the year-ago quarter, the primary drivers of operating expense decreases were leverage on employee costs, reduced spend on travel and events and increased productivity. Fiscal-year '21 operating expenses were $296 million or 83% of revenue. That compares to $281 million or 94% of revenue a year ago.

We see many of our cost efficiency efforts as sustainable changes that will drive our operating margins higher over time. These efforts include reduced selling cycles, productivity enhancements through system and process improvements. We'll continue to invest in innovation and revenue-generating opportunities, and we will accelerate these investments as we see the demand environment improve. Regarding investments in our sales efforts.

We're targeting a quota-carrying cells rep headcount of 255 at the end of fiscal-year '22. That's as we balance our prior investments in revenue-generating opportunities against driving productivity in this area. Recall that we've maintained our sales force hiring plans last fiscal year despite the pandemic impact. This fiscal year, we plan to take advantage of that capacity.

And as we see the macroeconomic environment improve, we will begin to accelerate our investments in quota-carrying headcount. Q4 net income was $94,000. And as a result, we have recorded our first-ever quarterly net profit. This compares to a loss of $13.7 million in the year-ago quarter.

Our Q4 net profit per share of breakeven compares to a $0.12 loss a year-ago quarter as well. In Q4 FY '21, our net loss on a GAAP basis was $18.3 million. In Q4 fiscal-year '21, GAAP loss per share of $0.15. Cash and cash equivalents were $230 million at the end of the fiscal-year '21, compared to $256 million at the end of fiscal-year '20.

This is a strong result given the $61 million in facilities capex we incurred in fiscal-year '21. We continue to believe our balance sheet is strong and positions us well to weather the current economic environment and provide resources for investment in future growth. Net cash flow from operations for Q4 was a positive $24.9 million as compared to a positive $11.7 million in the year-ago quarter. For fiscal-year '21, net cash flow from operations was a positive $1.2 million.

That compared to a negative $30.8 million a year ago. We believe we will continue to run at least breakeven operating cash flow on a full-year basis going forward from here on out. Capex was $11.2 million. That compared to $4.5 million a year ago.

And capex for FY '21 was $65.1 million, of which $60.6 million was related to our building projects in New York, Washington, D.C., Tokyo and Paris. These projects are now nearly complete, and we expect remaining capex related to these projects to be about $8 million with most of that to occur in Q1. Once these building projects are completed, we expect to return to our more modest levels of capex spending as a percent of revenue, more similar to our historical levels. Now let's turn to our outlook.

We expect Q1 revenue to be between $87 million and $89 million, and we expect non-GAAP net loss per share to be between $0.05 and $0.07. We will have and expect a weighted average basic share count of approximately 125.4 million shares in Q1. As we came through Q4, we saw continuing softness with the new and existing customers, given pandemic-related business pressures. Until we see positive changes in the economy, we will manage the business as we did this past year.

We'll focus on driving cost efficiencies and sales productivity. However, once we see positive improvements in the economy, we will invest into the available growth opportunities that afford us. For full-year fiscal '22, we expect revenue of between $375 million and $380 million. Our non-GAAP loss per share range is expected to be between $0.17 and $0.22.

And this assumes a basic weighted average share count of approximately 128.4 million shares. As we consider the demand environment for fiscal-year '22, and we're confident that our listings product will rebound as businesses reopen, but the visibility on the timing of the reopening remains limited. And as such, we are not including improvements in the demand environment in our fiscal-year guidance. We are basing our guidance on the business conditions we see for ourselves and our customers currently, with the macro economy, which remains sluggish, and customers who remain cautious.

We are well-positioned for when the business environment improves and especially for the long term. We are excited to push forward with our expansion into various areas of search, with expanding products and features, driving a broad new set of solutions we can sell on our Answers search platform. To wrap things up, we are pleased with our resilience in Q4 and overall for fiscal-year '21 given the challenging environment of our products. We nimbly took action to support our employees.

We focus our sales efforts, accelerate our search innovation and drive efficiencies. We're poised to grow when the macro environment improves. With that, I'll turn it over to Yuka.

Yuka Broderick -- Investor Relations

Thanks, Steve. Before we move along to Q&A, we'd like to invite you to register for our investor day on Wednesday, March 17, 2021. Please go to investors.yext.com for more details. Joining the Q&A session will be CEO Howard Lerman, President and Chief Revenue Officer David Rudnitsky, and CFO Steve Cakebread.

Gary, can we please open to questions?

Questions & Answers:

Operator

[Operator instructions] Our first question is from Naved Khan with Truist Securities. Please go ahead.

Naved Khan -- Truist Securities -- Analyst

Well, thanks a lot. Just a couple of questions. So I'm trying to understand the outlook for Q1 and the sequential decline versus the fourth quarter and what the components of that might be. And then, maybe a related question, just on the -- can you give us some color on the type of wins, customer wins you might be getting? Are there smaller deal sizes? And maybe talk about your pipeline a little bit, any color would be helpful.

Thank you.

Steve Cakebread -- Chief Financial Officer

Yeah. Why don't I start with the quarter? You know, we recognize our revenue daily. So the fourth quarter has three more days than the first quarter does because of February. So that accounts for a couple of million dollars of the sequential decline and predominantly most of it.

So I don't see any real problems with the decline in terms of dollars. It's more of a math exercise. Clearly, we didn't have up-sells as much as in the Q4 as we'd wish. So that contributes to it as well.

But it's mostly a day count for us. Customer wins, David or Howard, do you want to take that?

Howard Lerman -- Chief Executive Officer

OK, yeah, we -- I think we've talked about some of our customer wins in Q4. One of the places you can always follow for what's going on, follow us on Twitter. Our social media team is very active. And almost every day, we tweet a new Yext Answers experience that has gone live.

I think a couple of days ago, we tweeted Northern Trust where I am sitting in a building right now. It's kind of neat to just watch all these great site search experiences come up where customers can get answers. We talked about some of it. DR talked about some of the -- DR is Dave, by the way, not doctor, talked about some of the logos we won in Q4, the French post office, La Poste, Endeavor, Casio Computer, Popeyes.

And then, I retweet all of the stuff that we're tweeting, so you can follow me at Howard on Twitter to see each day the new Answers experience is going live. Q1 pipe looks solid. We continue to be conservative with our outlook with regard to the current macroeconomic pressures that are happening in the world. We are in the business primarily or have been primarily in the business of serving location-based businesses.

As locations are closed, that is a bit more challenging in certain location-based verticals. As the world comes back, we'll invest and continue to get back into those industries as things open up as those companies get back to business.

Naved Khan -- Truist Securities -- Analyst

Thank you.

Operator

The next question is from Mark Murphy with J.P. Morgan. Please go ahead.

Matt Coss -- J.P. Morgan -- Analyst

Hi, good afternoon. This is Matt Coss on behalf of Mark Murphy. Thank you for taking my questions. Steve, on the continued improvement in sales and marketing efficiency, can you quantify what that improvement was this year and then sort of what you expect that improvement to be going forward as you leverage all these new sales hires?

Steve Cakebread -- Chief Financial Officer

Yeah. You know, I think the quantitative part, you can just look at it, if you look at our year-over-year dollar spend from last year to this year and then the percent of revenue have been pretty significant. A lot of that is coming from, obviously, as Dave talked about, more tenured sales reps, more effective selling and marketing processes. I think going forward, we've always said that we're going to continue to drive our sales and marketing as a percent of revenue back down in line with what you'll see from other SaaS companies.

How quick that goes is, obviously, a function of revenue and our efficiencies. So I don't really have a time frame there, but I think you'll see it continue to decline over the next couple of years until we get in line with companies in our same size and space.

Matt Coss -- J.P. Morgan -- Analyst

Very helpful. Thank you. And the way you're guiding, you'll make sense based on what you're able to see in some of the challenges that you're still seeing in retail businesses. But are you making any other changes in the way that you guide perhaps assuming lower close rates or any other big differences versus the way you looked at guidance historically?

Steve Cakebread -- Chief Financial Officer

Yeah, if you go back and look at how we guided Q3, it's a similar stance. We've got this quarter coming up, February, March, April, still a lot of countries and a lot of states are closed. And so we took the position that we are only going to be realistic like we were before. As I said in the prepared comments, we're not looking or anticipating any openings at this point in time.

I think customers, as David talked about, you're seeing us get a lot of interest and a lot of opportunity. But as we said in our retention, up-sells aren't happening to the extent that we think they should. We think that's a lot to do with macroeconomics. And while there's a lot of people interested, there are still people being very conservative with how they spend their money until they see, not just the light at the end of the tunnel but they're at the end of the tunnel.

So I think it's stay tuned. I think all of us feel more optimistic about the future with vaccines, etc., but the world economy has got to start to come back. And that's certainly going to be -- timing is something we just can't predict right now.

Matt Coss -- J.P. Morgan -- Analyst

Sure, sure. Thank you very much.

Operator

The next question is from Stan Zlotsky with Morgan Stanley. Please go ahead. Mr. Zlotsky, the line is open on our end.

Perhaps it's muted on yours. Moving on, our next question is from Arjun Bhatia with William Blair. Please go ahead.

Arjun Bhatia -- William Blair -- Analyst

Hi, thank you. Steve, I maybe want to just follow up on that last point that you made about the light at the end of the tunnel. It seems like we're -- the vaccinations are going better than expected, I would say. And it seems like there is some light at the end of the tunnel that's visible.

What are your conversations like with customers that have maybe stopped expanding this year, but as they see that, hey, we might -- things might start to come back to normal over the summer or later on this year, are they starting to think about expansions? Are they having conversations about listing or cross-sell with Answers? Just help us understand what you're hearing from customers as you're talking about later on fiscal 2022.

Steve Cakebread -- Chief Financial Officer

Yeah, Arjun, that's a great question. I think David or Howard, you might be better serving Arjun with that?

Howard Lerman -- Chief Executive Officer

Yeah, Arjun, I'll take that question. The key stat that we talked about on the call just a minute ago was that Google Maps views have declined 50%, more than 50% year over year for our customers on a per-location basis. That is a primary value proposition of using the product. It drives foot traffic to physical locations.

So as that happens and has been happening, that has presented challenges for up-sell and retention. Now I don't believe, like I don't think anybody believes, in a year that people are going to not be using map services to use driving directions or phone calls to go outside, to drive the places, to go to stores, to go to restaurants and events and travel and go to hotels. The fact is, in Q4, it was more than 50% lower than it was in the previous year. And looking forward, we have -- we don't -- we have not seen quantitative evidence of a recovery.

Though, like you, we remain optimistic when you read the news that it could happen, but we're just not going to put it into our outlook until we can quantitatively see it. That said, while we are continuing to see headwind of -- in the location-related industries, you've seen in our financials, we've really focused on getting efficient sales. We have, which, like Steve said, a 7% year-over-year improvement, efficient with our operating margins, a 17% swapping improvement. We broke even cash flow positive for the year.

We focus on building a sustainable, durable approach going forward. And we stood up a whole new category with search and leveraged our wonderful Knowledge Graph technology, which is filled with authoritative primary information to take that to the next level and build a natural language search on top of it, which we closed more than 130 transactions in Q4, up from quite a bit in previous quarters that we had disclosed. So all in for the year, we don't know when listings will return yet. We haven't seen it because people are still not going outside.

But things are starting to open up. I read the news like you do. We can't call a specific date. When that date comes, this company is going to be ready with a more sustainable business model, with a product that we hope we'll see a tailwind from the recovery and a new category product with extraordinarily large opportunities in a number of categories from site search to workplace search to support search, tell you more about that at investor day and watch for our spring release with breakthrough extracted Q&A technology.

I've never been more excited to lead this company. The opportunities have never been bigger in the long run. We'll just have to wait and see with what happens with regard to the lockdowns and shutdowns to locations.

Arjun Bhatia -- William Blair -- Analyst

Got it. That's helpful. And then, on the Answers side of the business, last quarter, we touched on some large deals that came through, some of that were Answers slides, some that were mostly Answers. But what can you share with us about deal sizes on Answers as you've seen this quarter relative to what we were talking about last quarter, earlier in the year?

David Rudnitsky -- President and Chief Revenue Officer

So Arjun, it's David Rudnitsky. So a couple of things on Answers, what we're seeing is -- Howard talked about the number that we did. We did 130 Answers-led deals. We've got a good motion in terms of how to identify those, qualify them and close them.

It's shown that we have a little bit of a quicker sales cycle with Answers. We've had now demonstrable success. We know how to measure. We know how -- we have customers that we can reference.

We have experience under our belt for it. And not only are we seeing a quicker sales cycle on it, we've seen a couple of things that are interesting. One, the Answers-led deals Answers is getting us into companies that we necessarily would not have sold to when we were talking to a year ago. There's verticals that we've now penetrated as a result of leading with Answers.

When you look at higher ed, you look at technology, look at CPG, you look at direct-to-consumer, you look at public sector, you look at NGO, these are customers we've acquired, many of which in Q4, where Answers is the opportunity that opened the door for us there.

Arjun Bhatia -- William Blair -- Analyst

Thank you for taking my questions.

Operator

The next question is from Rohit Kulkarni with MKM Partners. Please go ahead.

Rohit Kulkarni -- MKM Partners -- Analyst

OK, thank you for taking my questions. A couple. In terms of guidance, Steve, as -- any more color you can give on what are you assuming in terms of beyond first quarter, contribution from listings versus Answers? And any backward-looking data you can share in terms of how the mix of listings versus Answers gradually changed as the year progressed? And how do you think that would -- as you think as you're modeling in the guidance? And then, I have one follow-up.

Steve Cakebread -- Chief Financial Officer

That's a lot of questions. That's -- first off, again, like I said, we kind of looked at Q1 as if we looked at Q4 and trying to be realistic about the macro economy. Clearly, listings is a dominant part of our business, but Answers is up and coming now but still relatively young. And so growth rates and numbers look, while big, are still small relative to our installed base.

So when we look at that, we've said numerous times, we think listings will come back. But we don't see them soon, so I can't really give you a mix issues. And keep in mind, we sell a solution. So a customer may come in to talk to David about Answers but start with listings or vice versa.

So it's not really -- we are not really able to give you information about mix at this point. We can look at installed base after the fact. But in that, I'll just tell you, it's still predominantly listings business because that's where we started with and have been selling listings for over five years now. So I can't help you on those particular numbers.

We'll have a little bit more information at analyst day. But again, Answers is a new product that you typically get to sell those new products as you get into this. I think it's been muted only because of the macroeconomics. And so we'll look and see as the economy starts to turn around uptake on Answers.

But clearly, listings will -- should start to come back as well, and anticipating that mix shift is going to be pretty hard.

Rohit Kulkarni -- MKM Partners -- Analyst

OK. And just on sales and kind of self-service way of selling, as well as partner-led selling, be it Adobe or like that. Any updates? Anything noteworthy? I know you've mentioned both of them as new channels that could help drive leverage going forward.

Howard Lerman -- Chief Executive Officer

Well, I think you quantitatively can see seven-point improvement year over year in sales and marketing. And remember, all of our reps were grounded this year and saw them over Zoom, and we classically held events and dinners, and we didn't do any of that this year. So I think you are seeing leverage from partners bringing us into deals and from bottom-up self-serve, and we will continue to lean into that going forward.

Rohit Kulkarni -- MKM Partners -- Analyst

OK, thank you. Thank you, guys.

Operator

The next question is from Brett Knoblauch with Berenberg Capital Markets. Please go ahead.

Brett Knoblauch -- Berenberg Capital Markets -- Analyst

Hi, guys. Thanks for taking my questions. Maybe just curious, as you look to some of the customers you have maybe down south in Florida or Texas, are you seeing anything different given those states are a bit more open compared to, I guess, other regions?

Howard Lerman -- Chief Executive Officer

Yeah, we still -- yeah, Brett, we have $1 billion of listings in Texas after we announced the mass -- I was kidding. We -- it's very hard to make geographical kind of new quantifications like that because companies are headquartered, large enterprises are headquartered all over the world. And so you do see a mix around the world, but it generally typically mirrors the country, not at the state level.

Brett Knoblauch -- Berenberg Capital Markets -- Analyst

Oh, that makes sense. And then, maybe just one more. As hopefully the economy reopens kind of sooner than faster, I guess, what gives you confidence that Yext is going to be one of the first solutions that they turn back on? I would imagine a lot of these retailers are going to be fighting for every single dollar, given they've kind of been out of business for so long. And could there be a delayed turn-on cycle as that does happen?

David Rudnitsky -- President and Chief Revenue Officer

Hey, Brett, it's David. Here's the thing. They never turned it off. So they still use us.

And what Steve referred to in his comments were the muted up-sell. And that typically, we would expect a greater up-sell for them as they expand their own business. But for the most part, we've kept them all. And I think what's exciting about the opportunity is as they open, it's not turning it off.

It's actually accelerating what they have. And so my teams look forward to the seasonal up-sell or the continued historical up-sell that we had. But they've never turned it off because if you think about it, if you're a business that's closed, people still want to know about what places are open, what safety protocols you have, what are the revised hours, do you have in-store pickup, do you have curbside pickup. None of that stuff ever went away, and they never dropped their footprint with Yext.

Brett Knoblauch -- Berenberg Capital Markets -- Analyst

OK, understood. Thanks.

Howard Lerman -- Chief Executive Officer

And that -- and Brett, that's how kind of the -- to Steve's point earlier, that is a bit how we grow with customers. They come up to Yext and often, they'll start using our listings product where they put the data into the Knowledge Graph. We structure that then take the bitcoin company that Dave mentioned earlier in the call, then they want to turn on Answers. And so they turn on Answers, and we start answering questions using our natural language search from the Knowledge Graph.

And then, going forward, we're going to be able to take that Knowledge Graph into more places, support search, other types of search solutions that they want. This all comes down to search. And the number of opportunities we have now with Answers to go into any client, whether they're retail or food, is much larger than it was 12 months ago, given our new product cycle, given our new set of products where we can go in and we can sell them a site search solution. And then, once they're on our search platform with natural -- with Knowledge Graph, we can sell them a support search solution.

We can sell them whatever type of search solution that they want. We can expand within the client based off the Knowledge Graph that they have with us.

Brett Knoblauch -- Berenberg Capital Markets -- Analyst

Understood. Appreciate it.

Operator

The next question is from Ryan MacDonald with Needham. Please go ahead.

Ryan MacDonald -- Needham & Company -- Analyst

Yes. Thanks for taking my questions. First on Answers. It's great to see the continued progress and success you're having there, going from 86-led deals last quarter to 130 this quarter.

Just curious, as you look at the pipeline and as your closing deals, I think, Steve, you mentioned at our conference in January that you're seeing an increasing mix of customers that are buying the solution off of a demo versus doing the full 90-day free trial. Can you talk about what sort of mix shift you're seeing there and how that's, if at all, compressing sales cycles?

David Rudnitsky -- President and Chief Revenue Officer

Yes. So Steve, I think -- Ryan, it's David. I can grab because I see the point of sale every day. The reason that we've shifted away from that and going right to or close is that we learned over the last year how to sell.

We learned what's important to the customer. And having that historical background on those deals, like what's driving it, we have a bunch of referenceable customers now. Most customers would prefer to do an evaluation, spend a little time with them and talk to a reference and understand it versus having to go through an entire trial period themselves. They want to go to market with it quicker.

And we've demonstrated that we're able to do that. And we've seen compressed sales cycles, particularly with Answers because we've had that under our belt now in terms of demonstrable success.

Ryan MacDonald -- Needham & Company -- Analyst

Excellent. And I guess, as a follow-up for you, David. Now sort of as in the sole CRO structure, just curious, should we expect any sort of changes in terms of org structure, comp structure or perhaps plans for international and CBU sort of now that it's all sort of under your umbrella?

David Rudnitsky -- President and Chief Revenue Officer

Yes. So that's been -- Ryan, that's been under way over the last couple of weeks. And what I will -- what I can share with you is that what I took a look at is unifying all of those. So when you talk about international, you talk about North America, you talk about CBU, they have come together now under this idea of one Yext in terms of really having as many common things as we can to scale the business.

I have every Friday -- I have all the leaders every Friday on the call with me. And what we are looking at is development of playbook, that's the best of the best. There are nuances in the different theaters. There's nuances in the different lines of business.

But there's a lot of things that I want our teams to do collectively, to scale the best practices across the universe. And it's something that I personally have been extremely focused on because that's the way we scale this thing.

Ryan MacDonald -- Needham & Company -- Analyst

Excellent. And then, maybe just last one for Steve. I just wanted to clarify, did you say that from an operating cash flow perspective that you're focused on a breakeven op cash flow on a quarterly basis moving forward until you start to see some improvements in the economy? Thanks.

Steve Cakebread -- Chief Financial Officer

So what I meant -- what I said was we will be operating cash flow breakeven or better on an annual basis going forward. Every quarter is different, as you know, because of our seasonality. So operating cash flow positive or breakeven quarterly, it's a little bit tough, depending on when we have events and do other things. But on a full-year basis, we've modeled out and believe that we'll be operating cash flow positive or breakeven every year on a full-year basis, not a quarterly basis.

Ryan MacDonald -- Needham & Company -- Analyst

Excellent. Thanks again.

Operator

The next question is from Stan Zlotsky with Morgan Stanley. Please go ahead.

Stan Zlotsky -- Morgan Stanley -- Analyst

Oh, perfect. Thank you so much for taking my question. My apologies about the technical issues we had before. Pretty embarrassing for technical issues for a software analyst.

But a couple of questions from my end. Maybe just on the Answers product. Clearly, you guys are seeing momentum with Answers and the 130 Answers-led deals of -- in the current quarter. When do you think you would get to a point where Answers gets to be material enough as a portion of the overall business to kind of take over the growth baton from some of the other products that you have in the market today?

Howard Lerman -- Chief Executive Officer

Stan, I'll take that. Let's talk about what we're trying to do with Answers first, and then I'll let Steve comment on the materiality. Everything we do at Yext stems from the technology that we went out with on our roadshow three and a half years ago, which was our Knowledge Graph. Knowledge Graph is a brain-like database with structured information.

In order to give Google and Apple and Facebook and Amazon information about our companies for our listings product, they don't just accept flat files. That data has to be structured. So it turned out that accidentally, we built a bunch of structured information for each of our clients in a structure or a technology, which we call a Knowledge Graph. And our Knowledge Graph is -- what a Knowledge Graph is what makes natural language search possible, every other search engine out there, except Google, by the way.

But every other search technology company out there uses index-based search to crawl sites and assemble an index and then has a single algorithm that gives you a set of links back. That is how search worked for a long time, and that's how search engines worked for a long time. And Google took things to the next level by building natural language search on top of a Knowledge Graph. But in order to give an answer back, you have to have a database to contain the answer.

And so we built the database first or knowledge first, whereas every other search engine is algorithm first because when you're searching or trying to find a ton of content you want to find a spot a ton of content, you need to find the place among a number of links and rank those results. So that was all about the algorithm. So every other search engine out there that keyword-based or keyword search is algorithm first, whereas the Yext is knowledge first. And as a consequence of that, we can employ multiple algorithms, kind of like a Google search engine results page that when you search for anything now, you have, if you search from Morgan Stanley, six, five, eight different snippets on a page, and those are all coming back from different types of algorithms executing simultaneously, many of them from a Knowledge Graph.

And so I give you this little bit of back story just because of the fact that when we look at our opportunity with Answers, it's not like listings and Answers, yes, there's product SKUs for it, but it's all still in this search solution. It all starts with the data. Listing is all about structured data. The Knowledge Graph is the database that holds that structured data.

And Answers is the natural language search layer on top of it. And every magnifying glass out there and every app and every site and every support site, internally, externally, we intend to compete in those markets. And we intend to have a search platform that's different than every other company that's out there because we're going to have a natural -- we have a natural language search platform built on a Knowledge Graph with multiple algorithms. Now I don't know -- I can't look forward and tell you exactly how fast it's going to go or exactly how fast listings is going to go because, quite frankly, we don't -- we're sitting here and things, even though they feel different than they felt in Q4, just -- we still haven't seen people going outside yet.

I think you're probably still at home. Maybe you are. I certainly am on Zoom. But when that happens, it seems like it might happen, then I'm bullish on where this company is going to go because you can think about a return of listings and growth in Answers on top of this Knowledge Graph platform, and it's hard to kind of pick them apart.

Steve Cakebread -- Chief Financial Officer

Yeah, I would agree, Howard. I mean, it is a platform. We sell -- and trying to sell to customers all of our services on the platform. Obviously, as you described, in a week or two, we're going to announce additional search capabilities.

So Stan, I don't think Answers per se dominates search capability over time. It will, obviously, become a larger part of our business, but that's going to take a while. And I am also very optimistic like Howard. I think the listings business, as people turn around and as Dave described, businesses are going to want to make sure they get found and provide even more information because it's going to be competitive to get your customer back.

So I don't know what the material transition is. And as the previous question, what's the mix, well, we sell a search solution, and I'm going to sell where we are going to sell whatever solution you're looking for here. But I do think search will dominate over time, but that timing is uncertain right now given macroeconomics. But I think, clearly, the future of this company is in search in a wide variety of ways.

Stan Zlotsky -- Morgan Stanley -- Analyst

Got it. Got it. That makes sense. And Steve, maybe a question for you.

Looking at the guidance for fiscal '22, 6% growth at the midpoint, a little over 6% growth year on year. And I do appreciate the focus on cash flow on an annual basis, staying breakeven or better moving forward. But what about on the operating income side and on the operating margins, given the growth of the business, should we be looking for more profitability out of the income statement and just to really help to balance the growth versus margin equation just a little bit better?

Steve Cakebread -- Chief Financial Officer

Yeah. I mean, clearly, Stan, we talked about this before. Our goal is to get to breakeven operating cash flow and breakeven non-GAAP EPS. Clearly, we've made it -- and it's not surprising, right? You're going to hit cash flow before you're going to hit non-GAAP EPS.

The time frames that we'll talk about in the future are partly because this year is still fickle. I think as we get back on track, we are going to see this business get into breakeven operating as well. But right now, I just want to get through Q1 and see how the business starts to come. But I would say, if you look at our trends, we're really, really close.

Those are two principles that we've had, and I think we've demonstrated we can get to one. As you know, we've been operating cash flow for a full year, two out of the last three years. So we're clearly on track. And I would say the trajectories that you're seeing with improved sales and marketing spend, improved efficiencies in G&A have us on course to get to non-GAAP breakeven, but the timing still TBD.

Stan Zlotsky -- Morgan Stanley -- Analyst

Got it. Thank you so much, guys.

Operator

The next question is from Tom White with D.A. Davidson. Please go ahead.

Tom White -- D.A. Davidson -- Analyst

Great. Thanks for taking my question. Just to sort of double-click on the kind of gross retention versus up-sell dynamics that you guys talked about. I guess, can you just clarify, is the softness -- the softness that you're calling out there, is it restricted to kind of retail and restaurants and maybe EMEA? Or are you starting to kind of see maybe a broadening of that dynamic across your customer base? And then, just a follow-up on Answers.

For folks that don't convert from the free trial, what's kind of the main kind of pushback that you get? And curious whether you think there's a chance for conversion rates from the free trial to kind of meaningfully improve maybe once the macro backdrop looks a little bit more stable for company?

Howard Lerman -- Chief Executive Officer

Steve, do you want to take the retention and up-sell dynamic?

Steve Cakebread -- Chief Financial Officer

Sure.

Howard Lerman -- Chief Executive Officer

And then, I'll take free trial dynamic.

Steve Cakebread -- Chief Financial Officer

Yeah. I think in Q4, I mean, clearly, our up-sells across the board have been challenged primarily in location businesses, as David described. EMEA has been challenged because it's been locked down. We don't anticipate much of that change right now.

I think in other businesses, the ones that we started to address with Answers are too new to even start to talk about up-sells. We have seen a few customers on a very limited basis hit or exceed their capacity, so they're upgrading there. But not enough to change our up-sell model at the moment. That's what we're looking for.

And I think one could suggest that as the macro economy comes back, we'll see our net retention return to more normal levels. But it's just a little too early to do that. But clearly, restaurants are not expanding. Hotels are not expanding, and that's the major driver right now of our impact.

Howard Lerman -- Chief Executive Officer

Yeah. And with regard to Answers, Tom, we saw pretty good conversion rates from our free trial industry standard. We're ending the free trial at the end of the month. In fact, we're so confident in our ability to sell Answers.

We are now just showing up and closing Answers deals. We will do pilots for enterprises that want to validate that our technology works. And you will also continue to see on our website as we target developers that want to kick the tires and the technology, they'll be able to build accounts and get sandboxes and use parts of the natural language search and Knowledge Graph for some period of time with some capacity limits. But it's for the free trial offer, that was a great way to get the product going.

We're excited with where we got. We clearly -- not just got a lot of free trials but closed a lot of real transactions with some amazing logos and traction. We're very confident in our ability to continue to sell this going forward without the free trial as we build up awareness that we can offer a better and faster and cheaper search than any other search technology out there.

Tom White -- D.A. Davidson -- Analyst

Thank you.

Operator

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

Yuka Broderick -- Investor Relations

Thanks for your time today, everybody, and we're looking forward to seeing you in a couple of weeks at the investor day on March 17. So please go register on our website. Talk to you all later. Thank you.

Operator

[Operator signoff]

Duration: 54 minutes

Call participants:

Yuka Broderick -- Investor Relations

Howard Lerman -- Chief Executive Officer

David Rudnitsky -- President and Chief Revenue Officer

Steve Cakebread -- Chief Financial Officer

Naved Khan -- Truist Securities -- Analyst

Matt Coss -- J.P. Morgan -- Analyst

Arjun Bhatia -- William Blair -- Analyst

Rohit Kulkarni -- MKM Partners -- Analyst

Brett Knoblauch -- Berenberg Capital Markets -- Analyst

Ryan MacDonald -- Needham & Company -- Analyst

Stan Zlotsky -- Morgan Stanley -- Analyst

Tom White -- D.A. Davidson -- Analyst

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