Q1 2022 Monday.Com Ltd Earnings Call
Frankly, they start bigger and we also expand faster. So that's a trend that's been happening in the last two.
Two years, even okay, all the time and I think.
Monday growth of that brand is.
Customers understand its a solution and they can trust them more and more like we see more of those top down village.
Starting hope that helps.
Very much. Thank you congrats again.
Thank you Scott.
We'll now move to a question from Brent Thill of Jefferies, Brian its Frazer here.
Thank you and this is John Daniel <unk>, a quick question on the new Workhorse products. Just wondering half full featured and maybe this is like a best of breed solutions out there.
Does that mean that compete in DNA and then second on your FHA.
Our partnership does that mean, you're making a bigger push into the U S public sector.
How is your presence today. Thank you.
If you don't mind. This is Ron just repeat the first part of your question you were breaking up.
Sure.
The new <unk> products.
Tons of capability, how do they compare versus best of breed solutions out there.
Let's say some of the partners that you're integrated with any update on timing for general availability.
Hi.
Thank you.
Roy.
It doesn't mean that we're competing with others.
Sure.
Okay.
And we actually integrate.
Really well into them like this quarter, we are also enhancing our integral.
Integration is going through.
Company's workflows in many ways.
Those.
Actually opens the door for a lot of enterprise customers.
We're excited about that.
Okay.
Thank you.
Yes, I think when we missed the second part of it.
Question.
Yes, yes, sorry.
In the prepared remarks, I think you mentioned.
They do a lot with U S government sector. So I'm wondering does that mean, you're making a bigger push into the U S public sector.
Do you have a meaningful presence today.
In that sector or industry.
Yes.
A new partnership with John Hi, it's very strategic for us.
As we go more to enterprise companies and larger enterprises.
Definitely the specific sector is very interesting for us.
Yes.
So.
Just as a partner is working in North America with a lot of focus on local government.
<unk> and other.
<unk> companies.
And for US this is a very strategic part of allowing our product of our customer base. So definitely we're going to invest more resources into that.
Going into the future.
Thank you for that.
Thank you.
Okay.
Thank you. Our next question comes from Brent <unk> of Piper Sandler Please.
Please go ahead.
Thank you maybe I'll start here with our on net dollar return crease pieces substantially here. This quarter is that a function of just.
The mix shift to enterprise, maybe can you talk a little bit about churn at all but just a little surprised to see that.
That metric continue to move up.
Back to Tullow enterprise, but just trying to understand why youre seeing that improve so much here sequentially. Thanks.
Okay.
Hey, Brian Kelly Ron So thank you for the question, obviously I would say that first we are seeing product improvement because we are very focused on continuing to innovate and invest in our products and this is why we are having.
R&D talent. So this is one of the reasons for the expansion second is our ability to expand within existing customers.
To unlock the value of the Monday products together with the addition of the number of seats and the number of vertical.
Lee.
I would expect with regards to the numbers that we got to a point. This is really best in the industry to be about 125% of our total customers.
And.
About 150% to enterprise I believe we're going to see potentially to basis points improvements, but we believe this is kind of stabilizing and we're going to see interest rates overtime.
So it makes sense I guess, Ron following up on the four Monday products.
Intuitively it seems like Monday products would be the bulk of the use cases, but maybe could you talk about.
Which of those core use cases.
All four part of the reason for that.
We focused on those four.
In this case, but those four are really stood out.
But it has the most potential.
Okay.
I would say that we see a lot of traction in our sales CRM product.
But also our developer product is very interesting, we see a lot of demand on the marketing front.
Just as well.
And obviously project management for Us, it's really the sweet spot.
We see a lot of momentum in each one of those.
Items in our.
Model.
We didn't take those into account is still new and we have a lot of growth to do in each one.
One of them, but definitely we see a lot of positive signs and a lot of very excited exciting.
Feedback from our customers using them. So we're very excited for us.
For the future of those for us.
Hey, Corey.
Turning to outlook.
Okay. So I'd like to add to what the run said So look next Monday special is the fact that you can build anything you want on top of it. So that's also true for each one of these products. So with your <unk> on top of each one and also connect them together and have been work really well together because it's all one platform so San Juan.
Customers are adopting them.
Okay to do anything else may want even now on top of the other basins.
Products.
Thank you.
Okay.
Thank you Brent our next question comes from Angie <unk>.
Barry.
Doug Andrey <unk>.
Thanks, Hi, everyone I just had a question in terms of.
One of the metrics, we used to provide just wondering how that trended.
The percent of AAR from over 10 years, or so I know you get the over 50, K, but just wondering.
If you have anything to add to that comment.
Comment and then secondly in terms of your deferred it sequentially increased quite a bit I was just wondering if there is any kind of larger seven figure deals that you've added this quarter anything that you could provide would be appreciated.
Sure.
Okay.
This is Alan.
With regards to your first question so the shelf from customers with them partners has continued to improve lead time, we disclosed it was about 70%. So it's part of fast growing up market together with enterprise accounts, we see this trend continue to improve and they're all becoming more meaningful in our total IRR I can tell.
You that more than 85% of our customers are.
Well, it's coming from customers, who are buying the pro and enterprise tiers. So.
This is definitely a trend that we see continued moving forward.
With regard to your question.
Second question, you were asking about calculated billings just to make sure what you were asking about.
Yes, that's right.
Yeah.
Alright.
There was a sequential increase.
So while we are very happy with the increase.
We haven't seen the process the calculated billing is not a leading indicator of our business usually look at.
Gross revenue growth net dollar retention rate number of customers. This is a more of a leading indicator. Obviously there is going to be fluctuation with calculated billings, but we definitely saw a sequential thing.
You mentioned, new Frontloaded in Q1.
And you obviously had a pretty sizable head count increases I was just wondering what drove you to do that.
Quarter, and secondly, can you maybe provide a little more.
Data in terms of where the distribution of the head count.
Is it mostly U S.
Or how the weekend. Thank you.
Okay.
Yes, Andrew this is Ron so just to give you more color about the increase in spend so.
About $10 million to $11 million of it.
Super Bowl advertising, which we mentioned in the previous quarter.
Another $10 million I would say roughly.
Our head count so easily we accelerated hiring in Q1 in terms of salespeople customer success manager discussing support and so on which the effects of this in terms of sales power will unfold in the next few quarters.
For us it was an opportunity to increase our sales force and the rest of the increase give or take is increasing performance marketing usually.
Q1.
We see strong demand in the market.
So two like ours with continuous <unk> three to Q4, but there is usually an acceleration in Q1 and for US It's a great opportunity and as I've mentioned previously we managed to scale our performance marketing, while keeping the same efficiency in unit economics.
In terms of acquiring new customers. So we're very happy about our investment.
In terms of performance marketing.
I can certainly.
Like if you look at the history of the company.
<unk> been doing this.
Around each year.
During January .
Compared to last year.
Kept the same.
Efficiency metrics and ratios. So we're really happy with elegant and Andrew related. This is Andy Ron just with regards to the produced outside of the U S.
In Israel, there is a combination of Israel U S around the world.
With regards to <unk>.
And marketing resources were also hiring enterprise sales managers in quota bearing to continue the growth of the business.
Outside of Israel.
Thank you.
Thank you Andrew our next question comes from George <unk> of Oppenheimer.
No.
George Please proceed with your question.
Thank you for taking my question.
Maybe just following up on the sales comments with the introduction of the new work I'll pass.
<unk> do you anticipate any changes to your sales and go to market Ocean layering in either specialists are putting more focus on particular verticals.
Yes.
Hi, Doug.
Hi.
George.
And so.
Yes, yes.
Yes, I'll take that this is Ron so in terms of our go to market.
So it does need world class products, so definitely we see here a huge opportunity mainly.
Mainly because those products allow us to market to specific audiences.
Specific customers.
So we can have.
More targeted marketing to those audiences as opposed to have them as a more of a broader broadcast to a mass audience. When we talk about the work less.
Having those independent products will allow us to have more specific targeting resulting in what we already seen early signs of.
Lower customer acquisition costs.
And.
Better adoption in terms of acquiring new customers over time and this is the big opportunity here.
We already see that as well, we see those customers expanding from that specific use case. It just starts with two more use cases and eventually.
As part of our vision as a company to have the whole company working on the workhorse platform. So this is part of the reason why we're so excited about those new products not only that it allows us to have a more efficient go to market, but better onboarding and more potential to expand within an organization.
We wanted to do and but we see this as a long term like all these products that we released you know.
Something.
It's a gradual changing for those.
The areas and like Allen mentioned, we are bidding more than this year. According to the results from them.
And the <unk> following up on the broader competitive landscape are you seeing any changes relative to are you mostly.
Landing in Greenfield opportunities are you seeing any vendor despite smith.
Or just changes in the way.
You're dealing with multiple products had individual customers.
Yes. So this is Ron so so we are actually the same 70% of the deals, which we see no competition.
Yeah.
A huge greenfield.
In terms of opportunity.
And our ability to acquire new customers in terms of those new products.
I mean, it's one of those categories to our existing competitors, it's still early.
Efficiency in terms of customer acquisition.
And projects another growth opportunity.
In terms of go to market.
Got it.
And the dynamics that we see.
And I commend the P&L when we're emphasizing.
For the last two years have been marketing to those exact four.
The segment's.
There was a solution that Monday.
Okay were adopted so we're feeling very positive.
Okay.
And this going forward.
Thank you very much.
Thank you George.
This time and before we move on to our next questions. We would like to remind you that if you would like to ask a question you can do so by pressing star followed by one on your telephone keypad BTG change your mind. Please press star followed by King and ensure that you are on mute you did 81 proceeding with your question.
We will now move over to our next question, which comes from the line of D. J Hynes of Canaccord D. J <unk>. Please go ahead.
Hey, Good morning, guys. Just one question on my end.
Roy or Ron can you just remind me of the signals that you guys use internally.
Our direct sales engagement like are you looking at spend threshold visit usage metrics and I guess the question the largest cohorts, which I assume is favorably impacted by direct sales such.
Does it make you think.
The final will be beneficial or like how do you think.
Yes.
Thank you.
David.
Yeah.
Ken.
Because this is a great question because.
Like we've mentioned usually the way customers adopt Monday.
Bottom up.
Started using Monday from.
All companies all sizes and different roles different positions with sales algorithm works is that whenever a customer signs up.
We ask that.
So there is a bunch of detail during the sign up process about company size Daryl.
On the company and how our large deployment. They want and also we are using third party tools to enrich that information isn't all that information, we classified accounts that have potential to grow.
So once we see.
Paying account with <unk>.
Engagement within the account and the potential to grow to let's say, a 1000 people or more all sales team is engaging the customers.
And basically.
It's a different process because the customers already using Monday happy with the product and then we try to extend the usage more with that offering and usually its short sales cycle, which leads to future sales cycles as well. So the motion is pretty much the way I've described it.
Any question, yes, it's about any change that we see so definitely we see a lot of opportunity on top of that I will see an opportunity to create a strong outbound motion.
See upfront opportunity to create a <unk> mechanism, where we can definitely that's a huge upside that we have as a company, which we also invested in.
So we are investing and often used for our sales team.
Excellent. Thank you for the color.
Thank you P. J. Our next question comes from Derrick Wood of Cowen. Please.
Please go ahead.
For taking my questions.
Guys keep announcing some some new Si partners.
You've mentioned that you've.
You've mentioned Tata in the past can you just talk about the kind of growth youre seeing from the partner channel and what kind of incremental leverage youre expecting this year.
Hi.
Neither.
So we see a lot of the partnership that we have within the things that we've long term obviously the bigger the partner.
The larger customers their address and you know the true.
Significant results.
Uh huh.
But it.
Takes more time and I think we're very bullish on those.
Partnerships as you mentioned that we're adding them.
And putting the motive emphasis on there. So we see partners is that true.
<unk> partners.
Because they add a lot of value to customers and a lot of ways and especially the large ones.
So we definitely see this as a strategic for the company.
Got it.
I wanted to ask you about pricing.
Jean <unk>.
Given the inflation rates.
We're seeing other vendors change pricing how are you guys thinking about potential pricing.
Increases or what kind of price changes can we expect coming out of these new products being launched.
No.
Yes, Eric this is Ron Thank you for the question so.
Basically.
I'll start with the product so in terms of the new products, we do intend.
They have different pricing for each one of those products depends on the industry, but that's regardless of the market Mark macroeconomics and inflation and so it's more about our go to market.
What people expect from each one of those products segment.
<unk>.
Inflation and so.
We monitor everything is going on very closely but frankly, we don't have any specific plans to raise prices.
But we're continuing to monitor and finishing changes we reevaluate as.
As we go.
Understood. Thanks.
Thank you Derek will take our next question from Robert Simmons of D. A Davidson.
Okay.
Please proceed with your question.
Thank you.
Could you update us.
Market place traction Youre seeing there updates on the monetization plans and then also does the guidance include any contribution from marketplace.
Yes, Robert this is Ron thanks for the question so.
Definitely our marketplaces is something thats very important for us as we scaled the company.
Within the marketplace. So basically after the developers can now monetize their apps using our payment platform.
When you release any numbers, but just to give you the sentiment we see very good results from that new release.
New App developers that created new application.
See higher conversion rates more customers are willing to pay you the net payment system. So definitely.
That made a huge impact on our loss base and we continue to invest.
The number of developers going up numbers application being created and also U.
Going up consistently quarter over quarter. So we continue to heavily invest into that I wouldn't say it has much impact on our revenues yet because it's still small numbers, but going forward.
A big part of the product has a lot of potential as well.
Got it great. Thank you very much.
Thank you Robert <unk> final question is a follow up question from Kash Rangan of Goldman Sachs cash flow as yours.
Hi, Thank you so much for taking my question I'm curious just given.
Given that you've just started hiring.
Heavy duty sales capacity as well.
We are starting to see that expansion rate and 50000 plus customers.
<unk> for this metric.
As we progress.
Possible.
Yes, Kash. This is Ron thanks for the follow up question. So this is the first quarter that we believe.
Okay accountant.
<unk>.
We're super happy with it and definitely those customers have a lot of room to grow.
Have much more scale and having them.
I would say that over time, we will.
Today's to keep releasing that metric quarter over quarter, but we do see this metric stabilizing but going forward are definitely going to have more options.
Now with the new products that we believe can also the.
Worth firms in Canada, as they are going to be more opportunities to expand our usage with other products. So definitely there is potential for that number to go up but as it is right now.
When we also benchmark this compared to other companies. This is Beth.
And there are numbers.
And we'll continue to invest in those enterprise customers.
Your line is now open.
Okay. Thank you Kash it that was our last question today, so we'd like to conclude by thanking you all for joining the call and we wish you a lovely rest of your day.
May now disconnect.
Okay.
Yes.
Yes.
Yes.
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