Q2 2021 Monday.Com Ltd Earnings Call

August 17, 2021

[music].

Yeah.

Ladies and gentlemen, thank you for standing by and welcome to the Monday Dot Com Q2 fiscal 2021 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session need to press star one on your telephone if you require any further assistance. Please press star zero I would now like to turn the call over to your host Keith.

You may begin.

Our earnings release for more information on the specific factors that could cause actual results to differ materially from our forward looking statements. Additionally, non-GAAP financial measures may be discussed on the call reconciliations to the most directly comparable GAAP financial measures are available in the Earth.

Earnings release, and the earnings presentation for today's call, which is posted on our Investor Relations Web page at IR top Monday Dot com with that I will turn the call over to Roy Man co CEO of Monday Dot com.

Thank you and thank you everyone for joining us today.

We're very excited to have completed a successful IPO and to announce very strong results for our first quarter as a public company.

<unk> seen from our press release, our business continues to accelerate across revenue paid customers and customer expansion, we generated $76 million in revenue up 94% year over year <unk>. Our CFO will provide you with more financial details and commentary on what drove Q2 results.

He will also provide our guidance for the rest of the year.

This is our first earnings call as a public company I'd like to take a few minutes to tell you a bit about Monday dot com. We've also posted a slide deck on our IR website that provides you with additional color on our business and in our view for our Q2 financials.

When we first started Monday dot com, we started it with a mission to give our customers the power to create their own work software to do that will revolutionize the way people use software, giving them. The same low code no code capabilities once reserved for software creators and designers today.

More than nine years later, our customers use minded to come in ways, we could have never imagined.

Virtually limitless use cases, and an organization of all sizes.

With that mission, we are leading in a new category called Workovers, Iran. Thank you Roy.

Before we dive deeper into our platform, we'd like to highlight our market opportunity our work horse it broadly applicable for any organization and team across the growing number of use cases.

According to estimates from IDC, our total addressable addressable market was $56.1 billion in 2020 and will grow to $87.6 billion in 2024.

Further we believe our workhorse platform is applicable across the $1.25 billion information workers that industry analyst estimate exist globally.

Now, let's dive deeper into our platform.

Our cloud based platform is a no code low code frameworks is consists of modular building blocks that allow our customers to create their own self replication and work management tools.

By using our platform our customers can simplify and accelerate their digital transformation create a unified workspace across departments and increase our operational efficiency and productivity.

Our software is simple enough for anyone to use yet it's powerful enough to drive core functionality within an organization.

Our platform also integrates with other systems and applications, creating a new connective layer for organization that links departments and bridges information silos.

We believe this makes our work with a core solution that customers can rely on to run their business.

Our customers our partners, we are continuously molding a possible future together.

We distinguish customers with more than 10 users from a broader customer base and they are the core focus of our sales and marketing efforts the.

The revenue growth rate of our customers with more than 10 users.

How safe the rest of the business in each of our previous fiscal years.

And our expectation is as such customers will continue to grow in the future.

Moreover, our ability to successfully move up market is demonstrated data consistent growth in the number of our enterprise customers, which we define as customers with more than 50000 EMEA are.

We ended the quarter with 470 enterprise customers compared to only 144 in the year ago quarter and increase of 226%.

We employ an efficient go to market model, combining our extensive self service funnel and a direct sales approach, which consists primarily of our sales team our customer success and partners team as well as our App marketplace.

I want to share some of our product solution go to market approach.

<unk> solutions are complete products are result of a vertical built on top of the workers' platform.

This allows a customer with different intense define and adopt Monday.

Now I will turn this over to Roy to discuss our apps in our App marketplace.

You're on.

We took her no limits approach to new heights to allow any developer to build on top of Monday Dot com with Monday App, we added even more freedom with our app marketplace, where each customer can extend the platform on their own.

This no limits approach leads to happy customers that not only lover of product both so feel they're part of our journey.

The number of our customers grew we heard more and more stories on how we changed their business and for some their lives.

We began to fill an ever growing sense of responsibility a responsibility to be there for our customers with a world class support and.

And ever improving platform that allows them to do anything there business demands or their imagination takes them towards.

This responsibility extent towards the communities, we live in as well.

We saw the amazing impact Monday Dot com has a nonprofit organizations.

From work, we have done together, we see that many nonprofit organizations have a massive technological designed a device that prevents them from making the impact that they seek are equal impact initiative aims to close the digital divide with the long term ambitious goals of making elastic impact on non profit.

Organizations.

With our knowledge and resources in digital transformation rudnick businesses and scaling teams.

We aim to be a partner for the world's nonprofit organization, one and make a positive change for all of US I want to give a quick charters for our employees Monday Dot com success happen only because of our amazing employees and a strong culture of transparency ownership in trust, we have built together.

All of us at Monday filled with shared the Cingal and work on the same path forward.

We believe that we are on the cusp of a massive change your work software.

If the last 10 years were defined by the SaaS cloud than the next 10 years will be focused on giving people the power to create software that treat their own needs.

We believe that we are best positioned to be the leaders in this change we have built the company to take such an opportunity head on while keeping our culture, our values and the love, we still have towards creating beautiful powerful digital product.

Today, we are thrilled to introduce a completely new capability to Monday Dot Coms workhorse platform Monday work Docs work docs represent the next step in our work with platform.

Documents provided great canvas for people to start their work and we see this as a massive opportunity to expand home Mondays adopted so our customers can create no code low code worked software.

With Monday work Docs are customers now have the ability to manage their work ideas and data in a completely unstructured way. Our work docs include two powerful technologies embedded in them are real time engine and document connectivity.

We believe document based collaboration is crucial for many work processes.

That's why we've built a real time engine from scratch it is.

As a completely new technology that allows for hundreds of people to work together on the same document.

<unk> Foundation that will allow us to take document collaborations to uncharted territories.

Another critical part of our work docs is that they are connected to other applications.

We see this as part of our connectivity layer that the Workovers provides.

We allowed any Monday objects, such as widget chart and views to be embedded into documents.

This means that our work docs have live object that update in real time whenever there are sources of data changes.

So Monday work docs are never stale, because they're connected documents.

This make work Ducks another no code way for our customers to build work applications on top of Monday Dot Com work always true.

Traditional documents were never designed to abuse and the way many themes you've them to date teams use documents to start work processes and collaborate together, but the documents themselves were never created to support. This we see this as an opportunity to turn these beginnings of documents into real work tools that people can use to work.

Together better.

Work docs to represent the next step in our journey to give our customers the ability to create their own work software no matter, how they begin or continue their work.

Until now boards, where the soul and reporting to our platform work docs are an additional unstructured more flexible way to onboard and deepen adoption in companies.

Orthodox are now live and working on Mondays workflow F and are available to all our plans.

And run.

Thank you Roy.

In Q2, we officially launched a free tier of money Dotcom Workover.

This is geared to small teams and limited only to users. We believe that this is this is an excellent way to drive awareness and broader adoption among a new set of audiences.

We're encouraged by the earlier response to the free offering and see this as a way to seed Monday usage, and ultimately drive conversion to enterprise customers.

We had a great quarter in terms of customer wins and expansion.

These were broad based across industry verticals with major companies, including Headspace, Minto Ardian and Walton Altice.

Let's talk about our head space as an example has faces is very well known mindfulness and meditation app dedicated to improving the health and happiness of the world.

<unk> begun to use million dot com work with to increase collaboration and efficiency.

For all of their marketing and creative processes across the globe.

In order to win subscription base companies like headspace must operate in real time adjusting to changes in each of their markets everyday which is why they chose our platform.

This win is another example of how money can help high growth global companies and we're very happy to be positive growth and success.

During Q2, we continued to expand our partnership ecosystem to that end, we kick off a new strategic alliances with global system integrators across schemes histories, such as manufacturing and real estate, including Hitachi solutions and NTT data.

We accelerated our growth and expansion into the Latin American market with new channel partners customer deals increasing our ASR in this region.

As part of our expansion into new markets. We also added Polish as an additional language available in our platform increasing the total number of languages to 14.

One of the things that we are most excited about is that we are truly developing them money dot com ecosystem of third parties.

Faces partners and developers that collectively drive usage and multiple monetization opportunities.

You will be hearing more much more from us on this front in the coming quarters and years.

And they hope has come through in our presentation and our comments today.

Dot com is a highly differentiated company with a stronger unique point of view about the future of work and collaboration.

We are capturing the massive market opportunity that is expected to reach over 85 billion in the next few years.

<unk> Com can help drive results for almost every business every size around the world.

We're very excited to speak with analysts covering the company and the investors who are joining us on this journey today.

I'll turn it over to Azure on to cover our financial and guidance. Thank you Roy Underrun and thank you to everyone for joining our call. Today. We are very excited about the opportunities we see for the company to continue to grow and evolve.

We'll go through our second quarter results, then discuss in more detail the business and close with guidance.

We were pleased with the results for the quarter, which demonstrated continued high growth at scale revenue in the second quarter came in at $70.6 million up 94% year over year led by large expansion within our existing customer base. Our net dollar retention rate for customers with more than 10 users was over one.

<unk> hundred 25% and our net dollar retention rate for all customers was over 111% as a reminder, our net dollar retention rate is a trailing four quarter weighted average calculation.

Also our focus on moving up market is working we ended the quarter with 470 enterprise customers up 226% from 144 in the year ago quarter.

On the hiring front during the last two quarters, we added more than 170 employees to Monday dot com, particularly focusing on R&D and sales and marketing this new <unk> accounts for more than 70% of the new talent added. During this period. We ended Q2 with more than 850 employees globally and we plan to.

Continue investing aggressively in adding new talent with a focus on R&D and our enterprise Salesforce.

Next I'll provide more detail on our second quarter financial results before turning to expenses items and profitability I would like to point out that unless otherwise noted all metrics are non-GAAP. We have provided a reconciliation of GAAP to non-GAAP financials in our earnings release gross margin came in at 89, 7% up from.

88, 3% in the year ago quarter research and development expense was $11.2 million or 16% compared to 20% in the year ago quarter, We continued to invest significantly in R&D, including growth in our engineering headcount, but the pace of our revenue growth has outpaced the investment growth.

Sales and marketing expenses was $55.5 million or 79% of revenue compared to 101% in the year ago quarter. The improvement was driven primarily by lower marketing investment as we're becoming more efficient allocating our marketing spend to focus on customers, we temper for users and enterprise.

Customers, we continued to make substantial investments in our sales organization and have significantly expanded our sales team over the last year similar to R&D. The pace of our revenue growth has outpaced the investment growth.

G&A expense was $6.5 million or 9% of revenue.

Compared to 8% in the year ago quarter, reflecting increased cost of being a public company operating loss was $9.9 million and operating loss margin came in at 14% net loss was $11.3 million and loss per share of negative <unk> 26 cents.

Moving on to the balance sheet and cash flow. We ended the quarter with approximately 878 million in cash cash equivalents short term deposits and restricted cash net cash used in operating activities was <unk> 4 million in the quarter.

Adjusted free cash flow was negative $1.5 million and was driven by strong collections stemming from our strong billings in Q4 and Q1 adjusted free cash flow is defined as net cash from operating activities less cash used for property and equipment and capitalized software costs, excluding nonrecurring items, such as Covid related.

To the buildup of our corporate headquarter in Tel Aviv now turning to our outlook for the third quarter and the full year of 2021.

We believe we can deliver high growth for the foreseeable future as we are addressing a large and growing market and we believe we are well positioned to be one of the long term winners in this space. There are more than 1 billion global knowledge workers today that could potentially use Monday.

We're introducing Q3 and full year guidance as follows for the third quarter of fiscal year 2021, we expect our revenue to be in the range of 74 million to $75 million representing growth of 74% to 76% year over year, we expect non-GAAP operating loss of 26 million to $25 million.

For the full year 2021 revenues are expected to be in the range of $280 million to 282 million representing growth of 74% to 75% year over year.

We expect full year non-GAAP operating loss of 93 million to $91 million and negative operating margin of between 33% and 32% compared to a negative operating loss of $86.2 million in 2020 and negative operating margin of 53%. We believe we can deliver high growth for the foreseeable future as we are addressing it.

Large and growing market that is still very early in its maturity. As a result, we will continue to prioritize investments in the business of a near term profitability and we continue to make progress against our growth phase target margins.

I'll also note that we intend to be active with regard to investor relations and will be conducting a number of non deal roadshows and starting to present at investor conferences in September with that I'll turn it over to the operator for questions operator.

Ladies and gentlemen, if you have a question or a comment at this time. Please press. The Star then the one key on your Touchtone telephone. If your question has been answered or you are seeing with yourself from the queue. Please press the pound key.

Our first question comes from Kash Rangan with Goldman Sachs.

Hi, Thank you very much lovely day fantastic results and congratulations on the first quarter as a public company, what a great start right.

Brian One question for you you talked about the sales and marketing investments can you talk about how should we think about.

How productive the shift towards more selling a little bit less marketing.

Sales and marketing is likely to drive traction in the enterprise going forward certainly it seems that you had a great quarter, but you're just getting started building out and.

And scaling our sales effort for the enterprise.

Once I get that it does look like you've made significant progress with operating margins and free cash flow yet your guidance still calls for a snapback.

Step back too.

Give yourself.

Losses. So just wondering if there's any specific investment you're making in the second half or just I'm just trying to keep things conservative.

The quarters.

Thank you so much congrats.

And Kash, Thank you Roy.

So yes.

We're putting a lot of emphasis on growing.

Like we mentioned before in our.

During the IPO we have.

That is driven by.

And no touch like we do marketing that we get leads.

Those lead to become paying customers in our salesforce.

Addressing those.

Customers after they pay and help them scale, so while we invest a lot in marketing.

See that we're doing that in a more efficient way. Okay. This is what you can see with the results this quarter.

Approach to new customers, becoming more efficient.

While we scale.

<unk>.

And each approach to.

Grow our customers and way more so you'll see both of these.

We're working really well.

<unk>.

As we mentioned before.

Our sales team investments being grown in the last two years.

Reach more maturity.

It's like working.

Better and better.

And Kash Hi, this is Leon with regards to your question on guidance. So well first of all we are very confident on our guidance and we feel comfortable with.

With the plan that we have to continue to invest aggressively while it seems that it's important for us to say that while we did a very good results. In Q2. We are we are going to continue to invest aggressively in the second half of the Europe in order to generate additional hyper growth at scale just in terms of numbers, our capital efficiencies well above two five just.

As a reminder for every dollar that we invested since inception, we basically generate more than two points of our stores in terms of.

So there is a huge opportunity its a greenfield market. Therefore, we would like to make sure that we don't pass this opportunity and continue to invest and are going to be additional recall, we're going to continue hiring aggressively in sales and marketing R&D are going to have the full impact of our new headquarter in Tel Aviv, we're going to continue.

To invest across other places in the organization and hopefully we're going to see some and continue our growth as we continue to go forward.

The essentially no question.

Absolutely great start congratulations thank you so much.

Our next question comes from Mark Murphy with JP Morgan.

Hi, Good morning. This is Matt Coss on behalf of Mark Murphy I'll add my congratulations on the quarter can.

Can you talk to us about the distribution of new use cases.

By pre packaged solutions versus someone using Monday to build something.

Completely from the ground up and then.

Maybe you can help us understand how many of your customers who have adopted pre packaged solutions.

Are using sort of a low code no code advantages of the platform to really customize their application.

Sure can you. This is Ron can you just repeat the first part of the question. Please.

Yes. So if you have a sense of your customers using Monday dot com new customers.

Our pre packaged solution versus sort of just using Monday to build their own application from the ground up.

Yes, okay. So this is around so.

Basically the majority of our customers usually start with.

One use case, and then overtime expansion more use cases.

I would say the vast majority.

With a pre packaged solution just because usually the way where it seems that users search for a very specific problem, they're trying to solve and this is kind of how we lead them through the onboarding process.

But I think the engine as part of that over time.

We see two trends one is further customizing their existing solution, meaning.

<unk> mentioned that suits their need.

But then finding more and more cloud solution that they can use and expanding the use of cleaner organization and also building their own.

Submissions on their own their own templates and use cases.

Low code no code so.

Basically everybody using Monday, essentially using notebooks capability using a.

Building the board itself and customizing. The calm is essentially if you think about it building a database.

Catch data.

And as we disclosed during the IPO process over 90% of our customers to use automation.

And integration so its pretty popular within our enterprise accounts.

So everybody I would say broadly speaking every customer's mondays leveraging our notes within local capabilities.

Okay. Thank you very much.

Sure.

Our next question comes from Brent Thill with Jefferies.

Thank you I was curious if you could spend a little more time on the enterprise traction.

And maybe provide some examples.

Or where youre seeing great great traction I think.

Maybe if you could also talk about your largest deployment in and give us give us a little more color in terms of how that that build out is going.

Okay.

Paul.

Yes. So this is the wrong so we see very.

Very high growth.

Customers overseas Teekay.

Over 226% <unk> growth.

From our side of the company. This is a strategic part of our business going forward.

We do invest heavily into the note that and bringing new customers into our funnel, but at the same time as we.

You mentioned in the beginning of the call, we invest heavily into making the product.

For enterprise customers keep adding features and capabilities.

And this part of the business is growing significantly faster than the whole of the business those customers demonstrate very high net dollar retention numbers.

And more.

And we are keeping and launching new features to that part of the business going forward.

Yes, hi.

And that.

And enterprise, we're focusing on security control features in governance, and Thats basically, enabling us to get into larger customers. They wanted to and we need to just open the door right now we've been making all of those things.

Yes.

Our biggest focus is at.

Please.

Sure.

Great.

Just curious if there were any geographic trends that youre seeing that are that are different.

Between the U S.

EMEA APAC any anything standout.

There's been a lot of questions as it relates to kind of return to the office as some people have been coming back and have you seen any noticeable.

Differential in the customer behavior, obviously, the numbers suggest that it doesn't really matter what environment. We're in for you guys right now.

Given the given the great growth, but any color on that would be helpful.

Greg Hi, this is Liam so as a reminder, we enjoyed hyper growth before COVID-19 and we expect to continue to grow growth at Hyperscale also.

Post Covid and hopefully it will come soon.

As a reminder.

We see the breakdown geographical breakdown, 52% of our revenue is outside of the U S..48% is in the U S..70% of our customers are noncash.

And we even added another Polish another language store plus one which is Polish now we have 14 languages. So what does is basically we are expanding within existing customer base in those geographies, we're already operating but as a reminder, we also have our partner channel that in places, where we don't have the Salesforce, we expanded with Dean <unk>.

80 of our partner partners ecosystem and this helps us to gain additional market, where we don't operate.

Holistically through this Jonathan.

Thank you.

Our next question comes from Bhavan, Suri with William Blair.

Hey, guys, let me Echo my congrats a great quarter out of the gate.

I guess I wanted to touch on the enterprise traction you've added more than 100 customers. So the 50, plus IRR I guess I'm trying to understand how much of this do you attribute to the product getting more sophisticated.

Its ability to handle complex workflows or do you think it's more driven by the fact, the direct sales motion and customer adoption is maturing like how would you balance those two.

Yes, Hi, this is Ron.

So my short answer will be both.

I think we've seen the combination of two forces.

One is obviously the fact that we are maturing our sales team we have more sales reps.

On our company.

And they're becoming more exterior.

So definitely this is one part of this effect.

Second part.

We invest heavily into that product for enterprise accounts.

And we're keeping to do that.

So we did a lot on that front just to make the product more scalable and we see that as we progress larger and larger accounts are able to adopt Monday.

And another very interesting in China, we see that.

Every sales cycle that goes with it.

Mixing account is.

For another sales cycles. So it's like a never ending process of finding new use cases, new department that can use Monday. So it's not like a one time deal that you signed up but more of a process. So therefore, we get larger and larger accounts.

Yeah.

Gotcha Gotcha Gotcha.

And then I wanted to touch a little bit on the freemium offering.

I'd love to understand and you gave some great color, but I'll just say what impact have you seen the top of the funnel because of freemium and then.

It makes sense to me that they will grow but have you seen any customers downgraded all saying, hey, I've only got a small handful maybe of a premium we think that motion at all the reverse of what we would like to happen.

Sure. So this is Ron.

So this is very exciting for us.

So as we launched the free tier.

We see that.

To add more customers that used Monday.

We incurred or cannibalize, our existing coal revenue to payment in terms of acquiring new customers.

At the top of the funnel for the company.

We didn't see any impact on our existing customers. So customers are not going to reducing the plants or anything like that.

One thing that is super interesting, but again this is still very early days.

But.

We've now seen a new type of funnel being created.

Premium accounts that over time and again, we see early signs of this convert into paying company. So I think this will increase the exposure Monday as a tool.

We offer and the amount of people that are associated capability and how do you keep it.

Hi.

I would just add that our free tier is now limited to only two users. Okay. So so it's not really impacting the larger customers is just a way to keep on using us and use us for.

For those.

Those type of like two user cloud.

No.

Got you got you that's very helpful. Thanks for the color gentlemen, and congrats again.

Thank you.

Our next question comes from Brett in Barcelona, with Piper Sandler.

Thank you and good morning, or should I say good afternoon.

I wanted to go back to the growth drivers of the business.

Growth accelerated here to 94% you are taking your full year outlook up to 75% growth for the year I think we were at 60% kind of going into the quarter. So as you look at the just the overall business.

What's what's performing better it sounds like enterprises strong existing customers is strong is that the main driver here given your optimism just stronger adoption and expansion than you expected.

Is it broad based is there a particular region or segment of the business. That's outperforming it just seems like the business here is much stronger and your optimism is much higher trying to understand.

What the primary kind of linked quarter drivers here of the business are thanks.

Hey, Brian this is basically.

Basically I think everything that you said, it's all up there Bob.

Obviously, our growth was being driven by long term secular tailwind and momentum in this space in the category and there is a combination of the following there is new customers that we continue to add to our platform. There is obviously an expansion within our existing customer base high quality.

And which can be demonstrated Tamara net dollar retention rate, which is now over 125% as a reminder, it was 121% in Q1.

And we're also seeing obviously, the enterprise momentum and the motion.

470 enterprise accounts.

226% year over year and the indications that we're seeing is basically that it continue to trend up.

And I believe that.

As a few of Monday, the fact that we are a market leader the brand awareness hopefully also.

<unk> by the IPO.

Third motion that was mentioned by <unk>.

<unk>.

We kind of had the sales organization in mid 2018.

Most of this investment so all of the things the combination of all of these things are creating our optimism with regards to.

To this growth and potentially a continuous growth.

Great to hear there and I appreciate that color I guess on the.

On the flip side of that operating losses have narrowed meaningfully in the quarter. It looks like your guidance suggests that operating margin operating losses here could continue to narrow.

Is that a function of just not being able to hire as aggressively as he was like I know, it's a tight labor market right now or is there something structurally more efficient about.

Your sales and marketing spend where you feel you can drive this hyper growth without aggressively investing as much as you have in the past just trying to understand why youre kind of narrowing the operating a loss here for the second half of the year. Thanks.

So as I mentioned earlier our brand. So we're not we're not trying to optimize cost actually we are going to continue and invest aggressively but definitely we see some efficiencies within our sales and marketing.

Investment.

We will continue to invest aggressively.

I don't want to think about it as I indicated kind of direction that we are operating in accordance with what we presented in our workspace model.

We are going to see further additional costs.

Believe in the second half of the year.

Mentioned with Justice to the new building, we're going to continue to hire aggressively even though there are some challenges with timing, we're still are going very well.

And are going to be a salary increase says we're going to have advanced by the end of the year. So I think there are going to be a cough. The community are going to be incurred in the second half of their parts obviously.

Working in accordance with our growth.

<unk> operating model.

Helpful color, great to see the momentum of the business. Thank you.

Yes.

Our next question comes from <unk> <unk> with Oppenheimer.

Hey, guys, great quarter out of the gate good stuff.

I wanted to maybe running around talk about work docs. The announcement you made today.

If you could give us a little bit more color and more interestingly, how does that work its way into your pricing plans what are the odds that within the next 12 to 18 months you actually raised prices across your plants.

Hi, Troy, yes, so that's super exciting that it worked up so were.

Essentially.

We see a lot of starting points for Monday in our Monday boards, where it's like a very structured way of transformation and the document to essentially allow customers to start with announced structured way right like you start something and then.

It really starts with like Oh.

Fashion docs.

Monday, we saw a massive opportunity with continuing that work on the platform, adding more people. So we see this as a new way for customers to start using Monday. So the drops as you asked.

Accessible to everyone, we don't want to limit that by pricing tier.

Kind of a limitation because we want everyone to start we will in the future.

Consider adding more.

Tears into the documents for like extended functionality, but we don't have that now.

And if I can add Tayo. This is Ron so take another point that's super interesting.

The combination between blood and work that so the effect that you can embed into a word Doc aborted where you can actually change the broker within the dah Evergreen is logic can have several people working together.

In this.

It's very intuitively and in real time.

Again.

The supplier and then have those two and vice versa, you can have adopt within the port.

So combined those two products together I think.

Generative very exciting ways that our customers can leverage our books.

Great maybe as a fee.

Follow up.

If you could update us on right now and how big is your largest deployments how many seats are in your license deployment.

Okay.

Currently this is ilene.

Currently it's 7000 seat this is a customer that we have this is the biggest.

Non-GAAP.

Got it excellent thanks.

Our next question comes from DJ Hynes of Canaccord.

Hey, guys great start here. Thanks for taking the questions just one from me I'll direct it at Iran, but.

Anyone feel free.

I was hoping you could talk a little bit about coexistence with other work management tools in your large enterprise accounts right I mean, I look at Fortune 500 penetration for guys like smart sheet Astana yourselves I mean, there's clearly overlap there so.

Hoping you could talk about how you see that playing out.

While there always be room for multiple vendors in these large accounts or do you think they consolidate around a single vendor over time, and how do you position Monday to beat that vendor.

Yeah. Thanks P. J, it's Orion so so it's a great question.

Overall may not come as a workhorse so essentially there's a lot of things that can build within Monday, but one of the key things that was super important for us being at work.

Integrated really well with our tool so essentially our goal is not to replace all towards within the organization to be a place where people can build stuff and manage a lot of the core functionality within Monday, but any app.

So utilization already use.

Can be integrated into Monday data can be presented within Monday, you can change things and data can be sink back into a third party application. So essentially our philosophy is to work with everybody. We're not trying to replace that we're seeing within the organization. So I don't think it's a point of consolidation, but are we likely to do.

This is the way in a way thats, where kind of the work that the organization. The backbone the connects as sustained within organization if it makes sense.

Perfect. Thank you guys congrats on the start.

Thank you.

Our next question comes from Derrick Wood with Cowen and company.

Great. Thanks for taking my questions and congratulations on my end as well maybe first one for Ron.

The enterprise net revenue retention rate you mentioned was 125 up from 121 last quarter could you kind of unpack how much has come from improvements in gross retention and how much is from stronger expansion trends and then speaking about expansion I mean project management is a core area for you.

But we get a lot of questions from investors kind of what are the next most popular two or three use cases and what's growing the fastest so if you could comment on that as well that'd be helpful.

Definitely so this is <unk> on the question with regard to use cases that will differ related to ROI around but let me start with the net dollar retention rates. So as a reminder, the core focus for our business as customers with 10 plus users. They include enterprise accounts.

And accounts that are less than $60000. What we see is basically a strong expansion within the existing customer base.

And as a kind of a proxy to this expansion. If you think about the recent cohorts, but when we are looking at our core there is important and this is something that we shared.

Historically, we see that the customers that we have are landing at bigger accounts.

So they have a larger and a retention and because of that.

The net dollar retention retention calculation is trailing.

Four quarters.

Weighted average trailing four quarters, what you see is basically catching up so the impact of these cohorts, which are getting much better.

Are impacting the net dollar retention and this is the result that you see in our net dollar retention basically getting to 125% and obviously also impacted by the hour.

Expansion within enterprise accounts.

With Russell use cases.

This is located in Germany. This is before I defer to Rohit.

Yes perfect.

So I would defer to you on the used cases, yes. So.

I would appreciate it if you can repeat the question.

Yes, I was just.

We get it.

Questions from investors on kind of.

What are the most popular two or three use cases outside of core project management in terms of where you guys are seeing kind of most traction I know theres a lot of different thoughts that you guys compete and offer but if you had the top two or three that'd be helpful.

Yes.

Great. So.

I would say one more that is.

CRM for like a smaller use case goes up to mid size use cases, we see that as a big trend for us.

And also.

We have a lot of customers or build their own use case, so they manage.

Customers from over 190 different business verticals. So they do they run manufacturing plan. Some managed clinical put Iot search Ron production. So it's not project management as much as like they run their own processes and they build their own.

To run those processes, so whatever that might be.

And thats more in the workflow process management kind of space.

Okay. Thanks for the color.

Thank you.

Our next question comes from Scott Berg with Needham.

Hi, everyone I also echo my congratulations on the strong first post quarter IPO results.

I guess the first question is and I don't know who wants to take it but is on.

The word docs in that specifically the product, but just how you think about pricing more in general going forward. Today, you released functionality or you talked about the functionality being included in the base price, but do you ever get to a situation maybe over the next couple of years, where you kind of modular eyes or component to is some of that functionality and sell that as an upsell premier.

Some tier versus and all in all you can eat today scenario.

Yeah. So thanks for your question this is <unk>.

So it's a great question.

When we launched our work dogs today.

Our thinking that we wanted it to be available in all.

Pricing plans because.

The idea was that anything that can drive usage and have more people within the organization that can use Monday it makes sense to be available in all client to go essentially we want to get everybody on board in <unk>.

There are two kind of future thoughts in terms of.

Further pricing and packaging so definitely.

The way that we think about kind of future pricing around packaging in terms of different.

Product solutions that we offer so in different industries have different pricing levels for example in CRM.

We can charge more per user and other industries as well so our thinking going forward is to package of product most significantly.

For those product solution, and then we can add differentiated pricing and perhaps different tiers.

So it does put a solution so definitely going forward.

As in our roadmap.

Understood quite helpful and then for Matt.

A follow up perspective.

You All had mentioned partners a couple of different times during your script.

<unk> had a chance to speak with different partners.

That you are currently starting to engage with it it's still very early in that.

In that lifecycle, but how should we think about partners contributing to the Monday.

<unk> business, maybe over the next two to three or four years do they can become a substantial part of your go to market sales strategy or where there always be up and maybe have a smaller kind of ancillary opportunity there. Thank you.

Great.

Right.

Yes. The partners is a big part of our roadmap going forward. So first of all like you mentioned it is helping us with global expansion in places we don't have the first steam on bus.

So they are and we're working with a lot of them together to offer solutions for larger companies larger enterprises that want to tailor made the platform connected to other stuff. So they help us a lot with professional services and many of them also are.

The large contributors to our marketplace to develop.

And a lot of stuff people across the platform you have so it's a very you know we have liked varied partnerships. Obviously not everyone are the same but as a whole the partnership is like.

A big part of our vision going forward.

Yeah.

Okay.

Yeah.

Thank you our last question comes from Andrew Gasperi with Brandon Burke.

Okay.

Thanks for taking my question and congrats on going public.

First I guess I wanted to ask a follow up on the competition question.

I know that a lot of other work management tools are also chasing the larger end of the mark of the enterprise customer. So I was just wondering if any of these bids are competitive that you.

We're seeing right now are they mostly greenfield.

Yes.

Thanks, I know this is Ron so from anything that we see.

This is a huge greenfield opportunity for us.

There's some will be causes for the IPO on 70% of the deals we see literally no competition, usually customers email and spreadsheets and Powerpoint.

And even though.

To communicate and collaborate.

And it just seems that everybody are trying to improve update where it can make it more efficient so it definitely feels like a greenfield.

On 30% of the deals we see I would say more of a vertical competition. So if somebody use Monday for CRM for example, we might compete with <unk>.

<unk>.

Focus CRM.

If somebody doing project management, we might see other competitors in the project management space, but broadly speaking this is.

A huge greenfield and there's a huge opportunity to grow within this market.

That's helpful and just as a follow up.

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