Q4 2021 Monday.Com Ltd Earnings Call
Yeah.
Ladies and gentlemen, todays conference is scheduled to begin shortly.
<unk> continued to standby and thank you for your patience.
[music].
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the Monday Dotcom Q4 fiscal 2021 earnings conference call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask the question. During this session you will need to press Star then one on your telephone.
Please be advised that today's conference is being recorded.
If you require any further assistance. Please press star then zero.
I would now like to turn the conference over to your speaker for today, Darren Steven you may begin.
Good day, everyone and thank you for joining us on today's conference call to discuss the financial results for Monday, Dot Coms fourth quarter and fiscal year 'twenty 'twenty. One joining me today are Roy man and air.
Ron Zinman co Ceos of Monday, Dotcom and elder on Glaser Monday, Dotcoms CFO , we released our results for the fourth quarter and fiscal year 2021 earlier today.
Our earnings materials are available on the Investor Relations website at IR Dot Monday Dot com.
There you will find the investor presentation that accompanies our prepared remarks, and a replay of today's webcast under the news <unk> events section certain statements made on the call today will be forward looking statements, which reflect managements best judgment based on currently available information.
These statements involve risks and uncertainties that may cause actual results to differ from our expectations.
Please refer to 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 will be discussed on the call reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on the Investor Relations website with that let me turn the call over to Roy.
Thanks, Byron and thank you everyone for joining US today, we had another great quarter at Monday Dot Com and ended the fiscal year of 2021 exceptionally strong.
During the past quarter revenue grew by 91% compared to the fourth quarter of 2020.
We are again seeing strong revenue growth across all verticals customer segments and geographies.
With over half of our revenue coming from outside the U S.
Let me discuss three main factors that drove our strong topline performance first we remain highly focused on acquiring new customers in 2020 . One we added 38000 net new customers, bringing our total customer count to 152000 customers representing 34%.
Growth from the prior year.
Second we are seeing great momentum with large customers in Q4, the total number of customers with more than 50 K in annual recurring revenue was 793.
Up 200% from a year ago, the enterprise tiers remain our fastest growing customer tier new accounts with 100, plus users are now more inclined to take enterprise tier as default as we continued to add more value to this year.
During the last quarter, we enhanced the enterprise tier by adding several new administrative and security features including content directory audit logs and encryption key enhancements. These improvements will allow enterprise customers to manage and grow their business with confidence and ease while making their data more sick.
<unk> than ever.
Third we continue to see strong expansion within our existing customer base once customers adopt the workhorse platform and realize its value their usage often grow organically.
Spanning across use cases and departments.
In Q4, net dollar retention for customers with more than 10 users improved to over 135% customers with more than 10 users now account for 72% of our ear are up from 63% a year ago.
Overall net dollar retention rates for all customers improved to over 120% as a reminder, our not our retention rate is trailing four quarter weighted average calculation.
Our continued net dollar retention rate improvements are further proof to our ability to deliver strong ROI and a great user experience for our customers.
Let me now turn it over to Iran to walk you through some exciting product announcements. Thank you Roy.
We continue to take our product innovation to new Heights, as we gave our customers more capabilities to easily create software applications and more can management tools that suits their needs.
Our mission is to allow anyone to run the core of their business on money Dot Com. That's why we're so excited to announce today that we are expanding from one product into a product suite that will further push our mission forward.
Going forward, our users will be able to switch between products within their workflow as platform. So they can unify work across their organization. These new products expand and augment our go to market strategy and create additional entry point for new customers to our platform. It is a great way for us to reach new audiences.
And to explore new markets. This quarter were thrilled to announce two new standalone products to the Monday ecosystem.
Monday walk forums and Monday canvas.
This for US continue our vision to cater to the beginning of work.
When teens first begin their projects processes and workflows, let me first touch on Monday work firms, which we launched in beta this task order.
For us at the beginning of so many workflows people understand that they need to collect information with forms even before they know exactly what they're going to do with it later.
We created Monday, where poems to capture data and collect feedback with building conditions and data insights.
Work forms can be used for inventory tracking order management surveys and much more.
With Monday work forms users can create personalized forums, where their business with no code form builder allows users to easily set conditions to get the right information and reduce the back and forth.
When they work phones can easily embed any form to your website launch in an email and you can instantly shared linked with all the stakeholders to see results faster.
Once the form is completed users can visualize and analyze data all in one place and generate treble reports.
Let me turn it back over to Roy to discuss Monday canvas.
Thanks Aaron.
In addition to Monday work forms we are pleased to announce the launch of Monday canvas ideas and innovation often beginning of non structure space and digital Whiteboards have become the go to tool for brainstorming and collaborating together Monday canvas provides users with real time collaboration and a visual way on an infill.
Canvas that is full of brainstorming editing features and templates often use case.
In Monday canvas users can add sticky notes due free drawing scraped diagrams and user flows using shaping connectors and Ed text using textbooks Monday canvas will helps teams collaborate brainstorm and manage work together with more business impact.
We are super excited about these new products and you can now sign up and use them on work firms dotcom and canvas dock Monday Dot com.
Let me now touch on the continued success of Monday work Docs, which is out of beta and available to 100% or for our customers. It's.
It's amazing to see how much our customers loved Monday work conducted over 60000 customers are using Monday work darks for a range of use cases and industries, such as marketing operation CRM anymore money.
Monday work docs or maybe one of the fastest adoptions of our building block we ever had with customers having created over 800000 work docs to date.
Lastly, we were proud to be named <unk> 2021 Tech Innovator award winner for office productivity software during the fourth quarter. This award reflects our investment in research and development and our ability to hire top talent are paying off let.
Let me now turn it back to around to further discuss our expanding work or ethical system. Thanks. Laurie This is all super exciting.
We continue to grow any power, our strong partner ecosystem by allowing others to more easily operate and build on top of a workhorse platform letting.
Let me first touch on our apps marketplace, which continues to expand we now have over 100 application that had been developed on top of the workhorse platform in.
And this quarter, we're pleased to announce that we've gone live with the new building payments solution for the ops marketplace.
This new solution will enhance developer abilities to monetize their application no longer will our marketplace partners and external developers need to develop and manage their own monetization system. It will also create a better overall experience for our users as they can now easily pay within the work with platform and manage their payments all in one.
Place.
We're also accelerating now that we've expanded the partnership we have with KPMG and signed a strategic alliance agreement with the firm. This alliance Leverages the business insights of KPMG with the local Nokia technology off money dotcom to build enterprise grade solutions that empower KPMG member firms across the world to deliver.
<unk> strategic operating models to customers on top of an agile work operating system with the announcements of this aligns mine dotcom joined our select network of leading technology and data companies working in alliance with KPMG to solve pressing business challenges and accelerate digital transformation, we are super excited.
To grow together with KPMG as we continue to expand globally and push the boundaries of the way enterprises work.
Lastly, I'd like to briefly touch on our progress with the digital lift initiative, which we launched as part of our June 2021 IPO.
As a reminder, the digital initiative was established to further our mission of closing the digital divide between the for profit sector and the nonprofit sector.
For every dollar of revenue we earn we have committed to donating up to one dollar worth of money dotcom licenses did nonprofit teams.
To date money Dotcom has donated licenses wharf over $7 million of AOR to over 5000 nonprofits in 52 countries for US is just the beginning the digital Liffe initiative is open to all nonprofits across the globe, we believe our commitment to ESG will pay.
A large role in shaping the future of money dot com, our values and our ecosystem in the coming years with that I'll now turn it over to Oliver on to cover our financial and guidance. Thank you Ron and thank you to everyone for joining our call today I will review our most recent financial results in detail and provide initial guidance for the.
First quarter and full fiscal year 2022 we're extremely pleased with the way. We finished the year total revenue in the fourth quarter came in at 96 million up 91% from a year ago. This brought our fiscal year 2021 revenue to $308 million, an increase of 91% from the prior year.
These results demonstrate our continued expansion within our existing customer base and acquisition of new larger customers.
We continued to execute against an ambitious hiring plan. We ended the year with 1064 employees globally. This represent an increase of 51% from a year ago with the majority of additions coming from R&D sales and marketing we continue to have ambitious Gulf. We're hiring these categories for the foreseeable future.
For the reminder of the financial metrics disclosed unless otherwise noted I will be referencing our non-GAAP financial measures. We have provided they were consolation of GAAP to non-GAAP financials in our earnings release gross margin came in at 90% up from 88, 6% in the year ago quarter R&D expense was 50.
In point 4 million or 16% of revenue, we will continue to invest significantly in R&D as we position Monday that com to drive durable growth and when our large addressable markets sales and marketing expense was $69 4 million or 73% of revenue compared to 107% India ago.
Quarter. The improvement was driven primarily by continued efficiencies as we continue to scale, our sales and marketing spend to focus on customers with enterprise customers and 10, plus users, which now account for 72% of total IRR in Q4.
G&A expense was $11 1 million or 12% of revenue compared to 10% in the year ago quarter, reflecting increased cost of being a public company operating loss was $9 9 million and operating margin improved to negative 10% net loss was $11 7 million and loss per share was negative <unk> 26 cents.
Moving onto the balance sheet and cash flow on a GAAP basis, we ended the quarter with approximately 886 million in cash and cash equivalents net cash provided by operating activities was $13 5 million in the quarter and adjusted.
Adjusted free cash flow was 10.1 medium and was driven by strong collection stemming from our continued strong billings and <unk>.
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. We are very proud of our achievements. During this exceptional year and look forward to carrying the business momentum into 2022 now let's.
Turn to our outlook for fiscal year 2022 for.
For the first quarter of fiscal year 2022 we expect our revenue to be in the range of 100 million to 102 million representing growth of 70% to 73% year over year, we expect our non-GAAP operating loss of 47 million to 45 million. This includes onetime superbowl advertising cost of $8 million for the full year.
2022 we expect revenue to be in the range of 470 million to 475 million, representing a growth of 53% to 54% year over year, we expect our full year non-GAAP operating loss of 147 million to 142 million and a negative operating margin of 31% to 30%.
With the large market opportunity and customers increasingly adopting the broader Monday dotcom work operating system platform across their organizations. We are committed to investing aggressively in our company. We will continue to prioritize growth, which we believe is the best interest of our shareholders employees and customers. Let me now turn it over to the operator.
Our questions.
Thank you as a reminder, ladies and gentlemen that star one to ask the question to withdraw your question press the pound key.
Please standby, while we compile the Q&A roster.
Our first question comes from the line of Kash Rangan with Goldman Sachs. Your line is open.
Hi, Thank you so much and congratulations on a spectacular finish.
Strong topline growth rate and also generating free cash flow is very remarkable.
Question for the team.
Can you tell us more about how the breadth of use cases is evolving for the companies because we all know that Monday to problem. It's not about just project management something beyond the causes of Workovers. They can elaborate a little bit on the breadth of use cases and also touch upon the competitive environment are you pulling away or.
Thanks look from the standpoint of.
The traditional competitors.
I guess on the financial front.
The disconnect is that you're generating.
Better than expected operating margins better than expected free cash flow, which is great, but the guidance theres not any change that much for calendar 'twenty two.
Relative to the time, we went public with respect to non-GAAP operating losses can you help US bridge the tremendous progress, we're making on the financials with very conservative financial outlook for operating margins. Thank you so much and congrats.
Okay cool thank you Kash.
So I'll start with the use cases and Allergan will continue in the second part so.
So it's true Monday has so many different use cases and I think you can look at it in two different ways. One is horizontal. So we are also as CRM as much of the project management tool. We are also used as a team for our tool for our R&D teams to manage their work for <unk>.
Our getting teams so that's like an horizontal view, but then we have.
Over 130 different.
Business use cases, where you see different types of businesses from and manufacturing plants that use Monday to run their operation to clinical trials and research.
Two really any kind of business out there and also a seven.
70% of our customers come from non tech segments like not tech companies. So we see a really wide spread usage off.
Monday throughout those different vertical and through Horizontals. So we really use a reaching.
The $1 3 billion information worker.
You know this is our vision to enable them to work better.
So thank you.
And can touch on the second path here. Thank you Rory Hi, Kash, so truly we had an exceptional year and in 2021 and we'd like to provide a responsible guidance for 2022.
And demonstrate continue to demonstrate hyper growth at scale.
Few things that we have to take in mind.
We are now as we said in Q2 and I would like to invest in further grow the business not only 2022, but also beyond 2022. Therefore, we took advantage of the fact that we finished the year with cash flow positive much ahead of what we said even in the IPO. We have a massive opportunity ahead of US. This is the time for us to grab land too.
<unk> increased our market shares and as you saw in the script, we are coming with new product innovation and product roadmap is a big thing for us. This year. So we said, let's take advantage of the fact that we're actually well ahead of what we anticipated where we anticipate it to be and continue to invest and drive hyper growth for the foreseeable future. So this is.
The number one priority for us, but we do it with scale and therefore also mindful to the returns that we are doing.
And other business initiatives that we're currently pursuing.
Well thank you so much.
Thank you.
Our next question comes from the line of Brent <unk> with Piper Sandler Your line is open.
Thank you and good morning, good evening I wanted to start with the new products you talked about work forms and canvas can you talk a little bit about pricing.
And then talk a little bit about kind of adoption trends how broadly could these products be cross sold into the installed base. Thanks.
Yeah. Thanks, Brent this is Iran.
First of all we're very excited to launch those two new products. This is the first time for us as a company that we expand.
Our product line, adding two new product and basically.
Given our product suite to our customers.
Currently our focus was to build two new products, where we feel people start to do their work. So people might start a new process or a new project with a forum to capture data or to manage until the request and also people might start with a whiteboard just to organize their thoughts or.
To start a process, we see this as a huge opportunity to capture.
New markets.
The new people that might be potential user for the platform over time.
So those are going to be independent project product and we're going to charge for them separately people will be able to use them, but we feel that both forms and whiteboards and never.
The goal there are on the path to achieve sustained and basically by allowing them to use both of those products and then overtime also integrated with Monday and continuing to work in the process to start it in each one of those tools might be a great leverage for us as a platform. So we see this as a strategic part of us growing our air.
The system of products at capturing more users more audiences and more people that want to start any kind of worth process.
Or a project.
Helpful color. So it sounds like these are actually going after a potential new lands not necessarily new products going out and targeting.
A big cross sell opportunities helpful color. There I guess earlier on my last follow up for you is just on you know.
Free cash flow to two consecutive quarters of positive free cash flow.
I guess, we can't quite call it a trend yet, but its very impressive execution. There as you think about the investments you're making in the coming year. It is a bit of a departure from what we've seen in the last couple of quarters walk us through the biggest areas you're investing in is it still largely around sales capacity is it.
Still tied to digital advertising, just trying to better understand where you're prioritizing the investments in 2022 here. Thanks.
Alright, so Brent.
Brent So with regards to your question with regards to your question on free cash flow. So we're coming from an exceptional year, but we had COVID-19 . So many things that we plan to do during the year, even with Q4, we have only grown so getting back to normal we're going to invest in having Boston says people will travel to see one another.
<unk> company event. This is one of our area that you would like to continue to invest second thing is we accelerated hiring so what we are doing we sold the trend in Q4, which we had the massive hiring continue by the way into the fiscal year 2022. So this is a place where we're going to invest significantly in addition to that we're going to do.
Two things that relates to new products and new investments.
To address new markets that we're currently not operating to enhance our existing work operating system.
And to grab land.
Versus competition, so from our perspective.
<unk> in head count investing in.
Getting back to normal and with the <unk> brand for example, the superbowl event that we did it was an exceptional 8 million. These are the things that we are aiming this year.
They radically or an extraordinary helpful.
Hi, It's Roy I'd love to add through early run that.
We see a massive opportunity and our ability to grow this year.
Both in marketing market demand like in a lot of areas.
It makes us.
Confident in investing a lot of money.
To do that.
Very helpful. Thank you.
Thank you.
Our next question comes from the line of Mark Murphy with Jpmorgan your.
Your line is open.
Yes, Thank you very much and I will add my congratulations as well.
Tastic free cash flow performance I did want to start it right. You had you had just mentioned I believe the.
The Super Bowl AD what is your early sense of the.
Effectiveness of that add that for instance, it did it drive website traffic did it drive a free tier sign ups.
And you know could it be abuse.
Customer metrics or billing.
Billings metrics in Q1, any any kind of insights would be greatly appreciated. There then I have a quick follow up.
Insurers. So thank you for the question so actually we loved the Super Bowl. It was amazing and we do like being the data nerd that we are we track everything so we kind of measured and then Bob between countries and the websites and searches in a lot of different things.
So we saw a big spike and following the AD It says.
But for us.
It's mainly an ability to jump to the next level of brand recognition in the world. It's a long term play it's not something you know that our we measure on the day to day basis. So low that was also great than that of the overall coverage. We got for the Admiral is amazing.
Okay, Okay, excellent and as a follow up L. Iran. If you if you drill into the <unk>.
Sequential change in our billings and I think we understand those numbers Ken can bounce around.
But I believe its 15% for Q4 the prior couple of years had been a 23% 24%.
So I'm curious just if there was any impact chip billing, perhaps stemming from duration or FX or timing and any other factors and if you might just have any thoughts on.
Perhaps on how to model billings, if if anything as unusual in that setup for Q1.
Sure. So with regards to billing just as a reminder, our business model based on they are already 70% or more now actually is coming from Andrew.
Annual subscription and 30% ish is coming from monthly subscription. So we see some trend powered the annual which always obviously, we benefit from but this is pretty much the trend.
As a leading indicator of this is one of the reasons why we why we care about billings, but you know you cannot really forecast.
The trend overtime.
This is an important for us in terms of the health of the business. When you know when we look at the return of the spend that we are doing either in performance marketing or sales and marketing or sales by the way then we see that we can measure their agenda and we kind of.
Forecast the billing that we're going to get we have an algorithm to address this.
And with regards to our growth in the four in the next in the next year. This is a main driver of the cash flow in the 1 billion.
Our revenue growth this year was 91% obviously.
Strong cash collection net dollar retention that was above 120% for all customers and about 135%. For example, also in driving this the growth in the enterprise customers is also a driver. So all of these unit economics of our main drivers of our ability to.
Continue and collect and have a very healthy billings model.
Thank you very much.
Okay.
Thank you.
Our next question comes from the line of.
Bobbin theory with William Blair. Your line is open.
Great. Thanks for taking my question, Jim I appreciate it I wanted to touch a little bit on the 50 K past cohort growth there is really really strong.
Yes, I'd love to understand a little bit about sort of Cui, replacing azure expanding our landing in these large accounts like is there an incumbent or is it still pretty much Emmanuel workforces.
Placing.
And sort of how sophisticated are these workflows when you get above 50, Kay is it sort of replacing sort of very sophisticated work was how should we think about what's being done with Monday that was not able to do a poorly done with other products.
How is that space about but let's talk about that for a minute.
Sure. So thank you for the question this is Ron.
So basically as we scale into the enterprise.
This is right for a small businesses, but also for the larger companies.
We see that 70% of the deals we see literally no competition people use.
Brett sheets, and emails and Powerpoint and usually we displaced dose.
So taking what they used to do offline or using very basic tools and using that.
With Monday.
So it does.
It's not exactly replacing but it's feeling a lot of vacuum that exists within the organization people use a variety of tools and then move in using Monday to feel all of those gas all of those processes that didn't have a place to be and another thing that Monday plays a major role in is to integrate a lot of the tools that are being used already in the organization.
So whether a company uses.
Our CRM software or another project management tool by integrating that into Monday, you create one place where you can reflect a lot of the data that happens in other departments within the organization connect different people and basically break the silo that exist because different people use different software. So it's not really displacing an existing software but.
More about filling the vacuum and connecting energy announced that is being used by the organization.
Hey.
As Roy and that's it.
Sorry, I can add to what Ron said.
Yeah.
The use cases themselves can grow to be really complex and doing a lot of things across departments. Some stuffs customers built like really blows our mind and.
But it happens gradually they onboard initially everyone used to track the work.
And really it.
Manage everything and then it grows over time with complexity and are held all the time.
So that's kind of like I don't know if lifecycle of usually most of our customers.
Got it yeah, and I agree with Ron like email and excel is not automation rates, so that makes a ton of sense.
I guess.
You guys have said earlier, you know you sort of data nerds.
And we've all known each other while I know you are.
The freemium model is something you guys started we all talk about is that the right way to do it and obviously working really well, but I'd love to get a little more color on how that's impacting the top of the funnel activity and net new customers, obviously healthy growth there, but I guess what are the early data to tell you about sort of customer awareness and the return you're seeing from the freemium strategy and not to get a little more depth of color there.
Yeah.
So this is Ron again, so far the.
The feature that we launched is very successful.
So far we see.
A significant increase in the amount of people that use the freemium version of Monday, while not hurting our loosen funnel, we mentioned that previously, but we AAV tested that thoroughly and just to make sure. It doesn't hurt the funnel that actually add a lot of free cash.
Tier users, while we are seeing and actually seen this accelerating as a trend it is customer from the free tier moving into <unk>.
And becoming paying customers.
It is.
Our second wave if you like of those kind of customers, but we see this growing and accelerating but this is very exciting and also another thing that unfortunately, we can measure is the awareness of the brand and people using Monday.
To do other things apart from work so it's kind of hard to measure the effect of this but definitely it has some effect of the brand and the awareness of months Monday can do.
Yes, that's good to see that premium conversion accelerate I appreciate the color guys nice job and thanks for taking my questions.
Thank you.
Our next question comes from the line of buy it deal with Jefferies. Your line is open.
Hi, Thank you this is John Gage retail.
I was hoping that maybe you could dig in a little bit more on the new products were clumsy canvas both being in beta.
Just wondering when you expect those micro G. And then the pricing is a little bit I guess at what forms the standard is around $29.
I'm wondering about the go to market for those as well if you can shed any light on the classical Kansas.
Lastly, how to think about contribution within the guidance for this year. Thank you.
Yeah. So this is Ron Thank you for the question. So basically we just launched this product theyre now in beta.
We actually are still experimenting with pricing the pricing also might be different for example, we might charge not per user with the forest, but different metrics too.
To price our product so it's still work in progress.
As I mentioned is just the beginning these are kind of new seeds, a practice that we planted and we will see the results in the future from our perspective.
And then take those into account with our guidance and kind of.
Revenue going forward, but we see this as a huge potential.
For next few years, both in user acquisition as I've mentioned previously, but also as a revenue generator overtime again. It's early days, we will experiment in will change the pricing over time, but we're very excited about this we got some great initial feedback from customers. It seems like there's a huge need in the market with those kinds of products. So.
We felt it might be a great opportunity, we dose going forward.
So with regard to the ecosystem. This is a place of.
Higher high focus of ours as part of our investment continued investment arm.
Randy and adding additional resources.
Thank you.
Okay.
Thank you.
Our next question comes from the line up and you take a theory with bearing Byrne. Your line is open.
Thanks for taking my question first.
And our progression I mean, I noticed a tick tick tick up quite a bit in Q4 to 120% or above 120%.
And given this is a trailing metric it sounds like you have a lot of expansion in the quarter can you maybe elaborate on.
What happened there and what was popular and.
I have a follow up.
Sure Andrew Thank you.
So as we said we are driving revenue and Theyre always being driving driven by two main things one is adding new customers and as you can see we have now over than 152000 customers and many of these customers that we add are becoming we start more than 80% of our <unk> is coming from Troy and enterprise tiers, and what you see basically.
Is that once they are becoming customers Monday that we then expansion process, because we already have them as customers and the salespeople actually expanding inside and you can see that the ease of use of the product. The fact that we are already embedded inside the fact, the fact that we have multiple champion is a key driver and.
As we continue to go off market with customers, we tend plus users now already represent 72% of total.
As well as the expansion within the enterprise account. This is basically driving this expansion within this existing customer base.
Thanks for that and then in terms of large deal activity.
Maybe another way to ask this question is I think last quarter you said.
You mentioned you were approaching seven figure deals I was just wondering if any were booked this quarter or if you're seeing any more activity on that front.
For this year.
Yeah. Thanks, Andrew So this is Ron so definitely we see them.
Also exploration in the amount of bigger deals that we managed to close another data point that we can share is that we have several deals over $1 million for the first time. So this is also very exciting, but it's not a onetime thing we see this as a trend that continues to happen.
And expand over time, so definitely we managed to land bigger deal than to close bigger companies using the product and we see this trend continuing.
In 2022 as well.
Thank you.
Okay.
Thank you. Our next question comes from the line of D. J Hynes with Canaccord. Your line is open.
Hey, Thanks, guys. Congrats on the continued momentum here.
As you think about the evolution to a product suite as you kind of talked about in the prepared remarks, how do you envision that impacting the go to market motion I mean should we expect more in terms of.
Bundling and packaging various solutions and I guess, what could be implications beyond landing asp's.
Hi, Thank you, it's a rohit so.
Yeah, we see this as a massive.
Go to market for US an additional go to market for us mainly because of the need for those two separate.
And an important thing to note is that and these are complete standalone products.
Both.
Formed work firms in Kansas, and so we expect it to be another addition for different types of customers, who may be looking for something else other than.
Plot firms such as our work with to join in the ecosystem in a separate place and then be exposed to the Frito product and then maybe try out other stuff. So we definitely see opportunities all around with this approach.
Got it.
And then a follow up just with respect to kind of your new partnership with KPMG.
At what spend level with a partner like KPMG typically start to get involved in and I guess.
Do you anticipate that they could bring your customers that start near these levels or is it more about helping you to kind of scale you are more mature more mature customers and their use cases.
Hey, Ed.
Yeah, Phil so yeah.
Yes, so with KPMG.
It's a special.
The partnership because we see the future together.
And I feel KPMG.
K P. M G. We manage to to find a way to get into existing practices, okay like digital transformations and others and we're very you know we're experimenting a lot with like a cardboard measurement and a lot of other stuff that I think will be the future for many different practices.
So I think they see the no code low code capabilities, we have as a big leverage to solve big problems and that's worth a roofing.
Got it okay. Thanks for the color guys.
Thank you.
Our next question comes from the line of Derrick Wood with Cowen and company. Your line is open.
Oh good morning. Thanks.
My first question I wanted to touch on.
The net revenue retention rate, a 10 plus cohort.
Up from 119 to 136, that's a 17% increase really impressive.
So how much of that was improvement in churn and how much of that was just pure expansion and if you looked at the expansion.
I mean, if you think about you know.
More viral adoption with better brand awareness or what you guys have done with direct sales and customer success teams, I mean, which area would you point to having a great impact on it.
Yeah. Thanks, Derrick this is Ron so so basically it's a result of both so we both seem less churn without of course and also we see more expansion within existing users.
The more expansion, we can attribute that to our ability to allow larger enterprises to use Monday and extend more also product improvement that we introduced in the fact that.
Those companies can use Monday across multiple departments. So they can extend more and more.
As the scale of the deployment of money within the company and also thanks to a lot of product improvements that we introduced this year, we see all those cohorts are having less churn also I think the free tier.
A little bit contributed to that people are able to try to put up more and then churn less and have more confidence. So a lot of great things that we introduced a product managed to increase the net dollar retention and as everyone mentioned.
Not only that.
<unk> retention itself grew but also the proportion of the 10 plus user population of increase so it's it's a double kind of increase that we see within our customer base, though.
Do great trends that we've seen and we also see that it's going to continue in 2022.
That's very helpful color.
And maybe al around a follow up for you on the on the operating income guide for 2022.
Obviously, you guys product development R&D is going to be a big focus.
As well as sales and marketing as you invest more growth, but wanted to unpack that sales and marketing.
A bit more I mean on the marketing side is there is there any impacts from from from idea Bay that that's changing the calculus there than on the sales side.
What should we expect kind of continued head count growth levels as we saw on July 21.
Hey, Derrick so with regard to the IBSA. This is less of a concern to us it's mostly for the B to C companies, we don't see an issue with that in our B to B model.
With regards to the performance marketing. So when you think about our business model and we have a hybrid model just as a reminder, we start with performance marketing who generate the leads and then there is the salespeople and the customer success and the partners actually.
The continued the motion so we are investing in both.
Categories on one hand continue to invest in.
Performance marketing, we have a phenomenal unit economics as you can see by the level of their cash flow by the level of returns but in on top of that we are bringing additional salespeople to the SMB categories to meet the market into the enterprise and this is a place if you think about the way we plan our it head count growth this year and this.
Is why we said that we're going to accelerate hiring we are frontloading expenses in the first quarter ending fiscal year 'twenty two.
As a whole.
Order to continue to drive the growth that we're seeing so definitely continue to invest himself on head count already increasing the quota bearing significantly also increasing the partners channels and places where we don't tell.
L. Three ball and continue also to expand our customer success management group that is also helping US a lot between you all and supporting the big customers are becoming more meaningful so investing adult fronts to drive further growth.
Perfect. Thank you congrats on a great quarter.
Thank you as a reminder, ladies and gentlemen that star one to ask the question.
Our next question comes from the line of Robert Simmons with D. A Davidson your line is open.
Okay.
Hey, guys. Thanks for taking my questions.
So I was wondering.
How much revenue are you expecting from the payment solution in the marketplace and how much is included in guidance.
Alright this is rajeev.
Repeat the question please.
Yeah on the payment solution that you have now.
How much how much in revenue how much revenue from that is included in the guidance.
Oh, Okay. Yeah. So thanks for the question Robert So this is basically a new feature that we introduced just recently.
Now as far as the earning call. So it's just early days.
Very insignificant.
Almost none so far and also this year within <unk>.
This revenue as far as the guidance. So again this is a for us at the beginning of <unk>.
Evolution of our off marketplace, we see more and more developers, creating apps within the marketplace already some of them have created their own solution to monetize those apps and we now introduced away for those developers.
Easily charge of our customers using the.
And payment system, which will reduce the friction and allow more developers to charge.
And build more application that could monetize so definitely we're very excited about this but again, it's early days in.
This year, it's going to be insignificant as part of our revenue.
Got it great and then.
So it looks like both the number of clients and the revenue per client grew quite a bit in the last year, how much of the revenue per car up revenue per client growth is coming from kind of secrecy and how much is it coming from other factors. Besides just the number paid users.
Robert So first of all welcome on Board I think this is your first call. So we when we look at.
The revenue per client because we have a large and diversified customer base more than 152000 customers. We don't really differentiate between the two but if you want to think about the way. The business model works is is the combination of what I mentioned earlier, we have the new customers and the expansion. So there is a certain ratio between the two and they basically when we.
Look at the total revenue per client because of the diversity in the clients big clients, whereas the smoke and the ACB is kind of a metric that we look but we don't use as an indicator of our business health.
Okay.
Got it great. Thanks for taking the questions.
Thank you.
Our next question comes from the line of Scott Berg with Needham Your line is open.
Great Hey, guys. This is John Godin on for Scott Berg. Thanks for taking my question.
As far as 2022 goes how should we think about the contribution from the partner channel. This year have you seen economical evolving over the past couple of years. Thanks.
So the partner channel is something that we started very early in the life of Monday, and we're very proud of it.
<unk> to grow quickly as a reminder, in places where we don't have the salespeople. We have 11 offices around the award in Latin America in Asia Pacific in other places in Europe , we actually have partners there.
It becomes very meaningful in our contribution of total ALLL, we have more than 150 channel partners globally.
This is the obviously the network with key Partners example, you can see a flat Google Microsoft Salesforce zoom et cetera, but we also continued to hire internally pardon John and managers.
They are becoming also very meaningful and our total head count.
So I would say that they are very very significant in our total Iraq.
Great and just start answering the word docs, how are you kind of seeing customers use that functionality in the bus initially.
How do you think about quantifying that usage within the product platform in the near term and maybe over the long term as well thanks.
Yeah. Thanks, Scott This is Iran. So so basically worked for US we just announced is out of data. We've made a lot of progress in terms of product innovation.
We mentioned this earlier, but the trend still continues its one of the first is building.
Building block or feature that we ever relief with the highest adoption rate.
More than 60000 existing accounts already using work that and those.
Those customers created over 800000, I will just the date, which they use and engage with so its a very meaningful part of our platform.
It became.
A meaningful part of what people do with their platform and again.
Factored this in terms of retention and usage.
In revenue, we will see over time, but in terms of engagement and usage and value that our customers get who walked us it's a phenomenal.
Feedback and statistics that we see so far so we are very proud of that product.
Great. Thanks, guys congrats.
Thank you.
Our next question comes from the line of George Weinstein with Oppenheimer. Your line is open.
Thank you for taking my question. So with the continued aggressive hiring can you give us maybe some perspective on how quickly. The recent sales hires have ramped up and you know as you look at adding people. This year are there any changes in where you're focusing your hiring we either from a vertical perspective or a retail.
Perspective.
So hey, George.
Yes, so we continue to hire aggressively in the sales team.
We also did some initiatives that actually accelerated hiring I can tell you that.
In December January and February .
Sorry in Q4 of last year of December November December and already in the beginning of this year, we are getting very close to it.
Achieving our targets with regard to sales.
We are hiring.
In Israel as well as in other places in the U S and Europe and in other places where we are now opening offices such US talk show in Asia Pacific. This is in our plans.
And this is something that we are.
Pursuing aggressively.
Okay.
One more question given the continued strong customer growth that you're seeing any changes in the way.
Wei customers' Lan either from a use case perspective or.
The type of teams that initially engage.
So we see customers lending bigger as we have a very.
Thousands of use cases, basically we have a number of products there.
Customers are landing project management work management, and we also see others like CRM and marketing we have different <unk>.
Solutions that we offered to the customers and we can see them coming from all kinds of.
Directions as part of their searching Google or other searching.
Engines.
Online.
Thank you.
Yeah.
Thank you.
I'm not showing any further questions in the queue.
Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
Great.
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