Q2 2022 Monday.Com Ltd Earnings Call
Okay.
Good day my name is Shirley and I'll be your conference operator today at this time I'd like to welcome everyone to Monday don't come in second quarter of fiscal year 2022 earnings conference call.
Now I'll turn the call over to Monday don't come as director of Investor Relations, Mr. Barr and Stephen Berman. Please go ahead.
Good day, everyone and thank you for joining us on today's conference call to discuss the financial results for Monday Dot Coms second quarter fiscal year 2022 joining.
Joining me today are Roy man in Iran, Ziman co Ceos of Monday, Dotcom and L around Glaser Monday Dotcom CFO .
We released our results for the second quarter fiscal year 2022 earlier today.
This quarter, we have introduced a new shareholder letter with our results and commentary for the quarter you can find the shareholder letter along with our investor presentation that accompanies our prepared remarks, and a replay of today's webcast under the news and events section of our IR website at IR Dot Monday dotcom.
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 our Investor Relations website with that let me turn the call over to Roy.
Thanks, Byron and good day, everyone and welcome to our second quarter earnings call.
It's been one year since our IPO and Monday Com continues to grow our total revenue in Q2 was $123 7 million up 75% from Q2 last year, we continue to move upmarket at a fast pace growing our enterprise customer base to more than a thousand customers this quarter.
While maintaining our best in the industry net dollar retention rate.
We continue to see strong growth across all customer segments with enterprise customers, leading the way.
In the second quarter of fiscal 2022 we finished with <unk> thousand 160 enterprise customers.
Hundred and 47% year over year increase.
The second quarter saw significant improvement in our operating margin as we continue to make our business more efficient since.
Since the company was founded we've generated approximately $4 in recurring revenue for every one dollar we burn.
The secret is be either efficiency is our big brain analytics platform. If you ever visited our offices you've seen dashboards immediately every wall displaying insights from big break our in house business intelligence too big.
Big brain collects over 200 million events, a day, which informs each of our marketing campaigns and every interaction we have with our customers.
Measuring everything we empower our employees to make efficient data driven decisions optimizing for cash flow and maximizing efficiency.
Another key part of our long term strategy is expansion of our product offering.
This past quarter, we announced our new work with product suite.
And we've already seen impressive adoption within two months, we have had over a thousand new paying accounts sign up with our new workhorse product.
Our new end to end products are tailored by vertical and build on top of the Monday workhorse platform, including Monday project Monday sales, CRM Monday, Dev and Monday marketer.
Customer can now switch between products within their work with platform. So they can unify work across their organization.
We're committed to being best in class in every one of our product categories and we're confident that we can achieve that thanks to the flexibility and unique infrastructure for work with.
These new products expand and elevate our go to market strategy and create additional entry points for new customers to our platform.
Let me now turn it over to Iran to walk you through how customers are using Monday, those call them to run their businesses better.
Your ROI money.
<unk> Dot com is core to our customers' business success, we are proud of the efficiency the reaching with the work with platform.
With a customer base of more than 152000 and over 200 countries and 200 different industries.
Our customers span thousands of diverse use cases.
We've pulled a handful of examples to give you a sense of that range.
Renault Group recently signed up with money Dot Com and now uses the word class platform to share and manage that communication activities of its brands around the world, they're using the platform to increase their communication functions collaboration and efficiency across 39 countries.
As part of their go to innovate the property industry.
Savills turned to money dotcom to execute impactful marketing campaigns across the global markets.
Our of limitation and consultants are partnered with samples to standardize their marketing processes minimize wasted time and in line faster decisions with their Kpis and O P. R.
Lastly in a total economic impact study released in March Forrester studied motorola's use of money dotcom for its global internal creative agency.
The report showed that Motorola has significant cost saving along with increases in overall productivity producing an overall return on investment of 346%.
Reading. This report was really exciting we built many dotcom as a unifying workspace that increases operational efficiency and productivity and it's amazing to see that in action.
Our dedicated product alignment team works on meeting the complex needs of our increase in enterprise customer base. This past quarter, we prioritized, making our platform, even more resilient and reliable.
With less platinum friction and more customizable administrative permission, we improve our platform infrastructure and database threaten our board's stability by 75% improve our board loading times by over 15% extending our multi region architecture. It made our core building blocks would worthy.
With hundreds of fixes and improvements across boards dashboards and docs.
In addition to those plasma improvements we prioritized the granular customizable security administration features that our customers need including editing permissions by sub item and item specific review information.
These new features have helped us maintain our best in agent retention rates enabled higher a R.
Finally every quarter our customer success managers helped hundreds of customers reached our business goals and add measurable value to the company.
For example in Q2, one of our customer success managers works with the larger consumer goods customer to maintain 100% of the money dotcom licenses of remaining employees doing layoffs or I first result in more than 65% jump in average monthly active paying users and high satisfaction with the platform.
At the same time, we're improving the way we communicate with customers around the platform. We started rolling out support over chat as well as an email to the C. O feature which allows users to directly sent us feedback.
Both initiatives have shown us where our platform can grow while increasing customer engagement that's.
Let me now turn back over to Roy.
We're on a marketplace with partnership continues to be one of our larger growth drivers across our company, increasing our ability to serve any and all types of organizations at the end of Q2. Our partner ecosystem consists of 177 active channel partners.
Well then in 17, you refer to parkers and over 150 marketplace apps with 30, monetized App that show meaningful traction.
Such strong product innovation expanding ecosystem inconsistent growth is only possible with our amazing team. We finished Q2 with nearly 1500 Monday dot com employees around the world.
And even as we grow we maintain our culture and employee engagement levels, we see that not just from our internal surveys, but from outside the world as well winning two major workplace awards. This year with Fortune 35, Monday is a great place to work and Inc. Recognizing us as one of the best.
Workplaces of 2022.
With this success, we remain committed to aid nonprofits with digital transformation through our digital lift initiative, including our commitment to donate 10% of our equity over time two foundations during the past quarter, we launched a digital lift products and opened application for your loan grant up to 100000.
In parallel our emergency response team Parker with organization around the world to streamline their relief efforts.
We leveraged the Monday dot com platform to support humanitarian and disaster relief efforts of Ngos on the ground, including initiatives in Durban, Ukraine and more.
All in all it's been a strong impactful quarter and we're excited to see what the next quarter brings with that I'll turn it over to Eddie run to cover the financial and guidance. Thank you Roy and thank you to everyone for joining our call today I will review, our second quarter results in detail and provide an updated guidance for the third.
They're in full year 2022.
We delivered another strong quarter of growth driven by customers increasingly adopting the broader among the dotcom walkaways and our product suites across the organizations total revenue came in at $123 7 million in the second quarter up 75% from the second quarter a year ago.
Net dollar retention rate for customers with more than $50000 E Mail was over 150% net dollar retention rate for customers with more than 10 users was over 135% and our net dollar retention rate for all customer was above 125% as a reminder, our.
Net dollar retention rate is a trailing four quarter's weighted average calculation.
For the remainder of the financial metrics disclosed unless otherwise noted I will be referring to non-GAAP financial measures.
We have provided a reconciliation of GAAP to non-GAAP financials in our earnings release.
Second quarter gross margin was 89% in the medium to long term, we continue to expect gross margin to remain in the high 80% range.
Research and development expense was 24 million or 19% of revenue compared to 16% in the year ago quarter.
We will continue to invest significantly in R&D throughout the reminder of the ear as we build our product suite and scale, our workhorse platform, both horizontally and vertically.
Sales and marketing expense was $86 7 million or 70% of revenue compared to 17, 9% in the year ago quarter, We anticipate sales and marketing expenses as a percentage of revenue to remain at the low to mid seventies. Throughout the reminder of the year G&A expenses were $14 6 million or 12% of revenue.
Compared to 9% in the yugo quarter, reflecting increased cost since becoming a public company operating loss was $15 4 million and operating margin was negative 12% net loss was $14 9 million.
Total employee headcount was 1489, an increase of 205 employees since Q1, 2022 we hired across all major functions with over 60% of new hires and customer facing role.
We anticipate that the levels of hiring will slow in the second half of fiscal 2022.
We anticipate that the levels of hiring will slow in the second half of fiscal year 2022.
Moving onto the balance sheet and cash flow, we ended the quarter with approximately 834.6 million in cash and cash equivalents net cash used in operating activities was $14 1 million in the quarter deferred revenue increased to $177 9 million at the end of the second quarter up from 106.
At the end of the first quarter adjusted free cash flow was negative $19 3 million and included year end bonus payment of 616 million and then insurance payment of 7 million adjusted free cash flow margin is defined as adjusted free cash flow as a percentage of revenue was negative 15.6 person.
Sent 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.
Now, let's turn to our updated outlook for fiscal year 2022.
For the third quarter of fiscal year 2022 we expect our revenue to be in the range of 430 million to 131 million representing growth of 57% to 58% year over year, we expect our non-GAAP operating loss of 25 million to 24 million for the full year 'twenty 'twenty. Two we now expect revenue to be in the range of.
498 million to 502 million representing growth of 62% to 63% year over year, we expect the full year non-GAAP operating loss of 112 million to 108 million in a negative operating margin of 22% to 21%.
With the recent strengthening of the U S. Dollar, we now expect FX to negatively impact our full year revenue growth estimate by approximately 300 basis points.
Given the concerns about the macro economy and the market with provided prudent yet achievable forward looking guidance. It should be noted that we did see some softness in demand in Europe at the end of Q2 and.
And while one month is not enough data to extrapolate a longer trend. We are closely monitoring the demand environment across all areas of our business and we'll be transparent with our investors about our expectations. We clearly have momentum across all of the areas critical for us to drive sustained level of high revenue growth over the long term.
Including new customer acquisition strong net dollar retention and then expanding product suite, our strategic focus remains on balancing healthy investment in the business with improving efficiency and profitability will continue to measure and monitor our returns and adjust investment levels as needed.
Now turn it over to the operator for your questions.
Thank you if you'd like to ask a question. Please press star followed by one on your telephone keypad now maybe lots with Joy a question. Please press star followed by two of the parents who asked a question. Please ensure your I mean, you did locally as a reminder, that star followed by one on your telephone keypad now.
Our first question comes from Kash Rangan of Goldman Sachs Kash. Your line is now open.
Oh and reporting on a day like Monday, we wouldn't expect anything less from Monday, So spectacular results congratulations to get clarity.
I had two questions one is with the rebranding roundup walkaways.
Having a new functionality that's focused on the developer market or a CRM et cetera, how are sales cycles changing for the company.
And what are the kind of targets, you're able to reach out to them what kind of budget are you able to tap into that's one thing and second is more of a financial question.
You talked about operating efficiencies and I'm curious, how you do that while not sacrificing the growth potential.
So much on scale.
Yeah. Thanks, Scott This is Iran. Oh. This is the first part of your question and then I'll hand, it over to Eddie Ryan So.
First of all it's not a rebranding that we see this as more of an evolution from where we were so just as a reminder, originally the platts where I'm at this day is very dynamic and flexible allows everybody to build anything on top of our world class and then last quarter, we took it a step further and further packaged our product.
As a CRM product as a tool for developers at school for marketers and we saw.
So great momentum in the last quarter.
Just before that we saw more than 1000 paying customers using those products. In addition to using the wealth management platform and this is again part of our strategy. We offered a flexible platform, but in addition to that we help customers on board with no specific solutions. We see this create better dynamics in terms of our ability to sell to larger enterprise.
There's the ability to land new customers, while also offering that flexibility, which did grow into wants to start using this initial product. So overall this acreage that has the ability to go to market and also land larger customers and offer a better solutions for our customers.
Hi, Kash this is Leon.
With regards to a question as a reminder, we always said that we invest based on the returns that we see from our investment and this is the playbook of Monday. So when we think about investing into the future, we're focusing on making sure that we invest in product and engineering and we grow the revenue generating sales headcount as we did in H one.
We have hired a lot simpler and the data.
The talent and we continue to invest also in online marketing, but the important thing is if it doesn't meet our guidance internal expectations with regard with regards to return we kind of take it in a more modest way. So from our perspective, we continue to invest when we see the returns that we are used to this as a player.
With that we operate in accordance.
Thank you so much.
Thank you. Our next question comes from it's all I Kid trunk of Oppenheimer.
Your line is now open.
Okay.
Thanks, guys and nice numbers.
Ron maybe you could just talk about the softness we've seen late in the quarter in Europe .
How much of this you think is macro.
FX, a little bit more of a play here in.
And maybe you can give us some color on the month of July has debt, which has continued into July or you've seen an improvement help us think about how have you qualified what you've seen into the rest of the year guidance.
Eight die exactly on so as we said that we did see some softness in Europe . We think it's broad based it's not specific countries, but you see it across many countries and also not specific to any segment. It is.
Started in June we also see it in July to be honest.
And if you combine into this the ethics in but it's also definitely something that we should account for it. So we said that in Q2, we estimate the FX impact.
Approximately 2% negative on our growth rate and we estimate that by the end of the year is going to be around 300 basis points.
You know, we don't have a crystal ball, but looking at the macro economy and geopolitical terms you know the Russia, creating war inflation and everything we'll definitely monitor carefully.
The level of impact on our business and then you know and we adjust our.
Accordingly, so I would assume that you know we should take it into account even when we took it when we speak about guidance probably by the end of the year.
Got it and then just as a follow up regarding your expectations of a slower hiring in the second half of the year is that just because you've kind of pretty much did what you needed to do on the head count or again.
With the macro environment in mind trying to be a little bit more cautious and focused on margins.
Yeah.
So when you think about hiring we did what we expected to do in H. One we hired the positions that we think we need that in order to scale. The company for future growth are now we're more focused in H two on bringing additional head count definitely not.
Only related to the macro economy, but this is according to the plans that we had originally.
So looking are looking at the macro economy, but this is not the main driver. So we're going to slow down the hiring and focus on positions that will not help us to complete the supporting functions to scale the company.
Alright, good thanks, guys.
Okay.
Yeah.
Thank you. Our next question comes from Arjun Bhatia of William Blair. Your line is now open.
Perfect. Thank you very much for taking my questions and congrats on a great quarter guys.
I wanted to touch on the enterprise traction it seems like you're getting really good performance and that's what's your take on it.
The highest sequential adds that we've seen can you just talk about the dynamics that you're seeing there with our customers.
Spanning seats are those new customers landing at those high air our metrics and then I am curious as customers do grow with you is there are you starting to see more consolidation of spend on Monday across.
Several different software solutions, perhaps and.
Departments as well thank you.
Yeah, John this is Ron.
So definitely we're very focused on our enterprise customer segment keep seeing great growth, there and we see the momentum increasing over time, so definitely we see fruits on that investment and we're committed to continue to invest going forward I always said that to your question specifically, we do see larger initial deal.
<unk> as a trend so definitely that's one trend I would say that the additional new products that we launched last quarter definitely I also make a big impact on those customers our ability to sell more.
Product over time and expand their usage so definitely another trend.
That's we're seeing also in regards to your question about consolidation I think that kind of in addition to what everyone said with the macro economy, we see here a great opportunity for us as a company because a lot of our customers realize that they can do much more with Monday as a thought for them. They might have several use cases, but now they see the potential of expanding Monday.
Throughout many more departments and perhaps consolidate a few different tools under under Monday. So definitely we are starting to see this as a trend.
That's also very interesting is happening where you kind of also pushing a given the macro economy.
Very helpful. Thank you and just.
I think all around you just touched on this but I wanted to maybe ask a little bit more pointedly. When do you think about the go to market strategy in the back half of the year, how how much are you balancing between performance marketing versus the direct sales investments.
Is it just that the direct sales investments are already made and you don't need to add more or are you pulling back on.
Performance marketing even further.
Environment, how do you view that in the back half.
Okay.
They are Joan.
So as a reminder, you know when we spoke about in Q1, we said that we are frontloading expenses in online marketing in Q1, which was an outlier and then when we continue in Q2 going forward, it's going to be a more modest investment we continue to invest in performance marketing. We believe this is an important go to market the two for us drive.
And generating leads.
To this we also continue to hire salespeople, but it's going to be in to kind of look you should think about it first we were looking at the return on investment that we are doing on performance marketing and second we are going to hire in a slower pace the additional salespeople and CPM in the partner steam.
Okay got it thank you and congrats again guys.
Yeah.
Thank you.
Our next question comes from Scott Berg of Needham Scott. Your line is now open. Please go ahead.
Okay.
Hi, everyone. Thanks for taking my questions and congrats on a really nice quarter.
I guess two questions here first of all I wanted to start on partner impacted on the quarter, while you discussed some of the.
Some of the momentum that you are having here, but do you look at kind of your new bookings in the quarter or whether it was directly through a partner or just influenced from your ecosystem. How would you compare the traction in the quarter Sabres a year ago.
Okay.
And partners, our high schools to Italy.
We continue to see strong momentum with our partners General we now have.
With regards to global expansion were a couple of new markets.
Well, we don't have our reps are directly.
As of today two of more than 177 active channel partners.
26 channel partners added on Q2, and we have outside this Monday additional 470, new referral partners in Q2. So overall, we see the momentum obviously with the current situation in Europe potentially there might be some slow down in the future, but this is something that we occur.
Encore and measuring or looking at on a constant basis.
Yeah.
Got it helpful. And then from a follow up question perspective, I know there was a question.
That was already asked any cash asked it on the new work O S. Lunches recently, the new functionality there, but how should we think about the impact on that and on your bookings going forward is that more to help lands with new customers or does it help expand with your existing customers better. Thank you.
Yeah.
Yeah, Hey, Scott destroy them, so that more with introducing new products was in both of the things you've said one it allows us to.
Open up new markets and have other.
Customers consider Monday on a different approach and end and gain more market share and more quickly and on the other hand.
And especially in these times and help customers expand into new use cases, adding more departments, adding more use cases and deepening their.
You said just Monday, even within existing departments. So it plays on both ends and and that's how we see it.
Yeah.
Okay, great Congrats on a good quarter, thanks for taking my questions.
Thank you.
Thank you Scott. Our next question comes from pin Julien Bora of J P. Morgan pinch Allen Your line is now open.
Oh, great. Thank you for taking my questions and congrats on the great quarter.
Wanted to ask you on retention I know you don't.
Yes, the fidelity I guess, we know it's been pretty stable.
A certain amount that is there is there a way to understand quantitatively.
The directionality of that metric.
And how has a gross dollar retention and trending in the biz.
Yes.
Hyping, Julien, Italy, Iran, and congratulation for the <unk>.
First time recovering does.
So good question on retention so.
When we speak about our retention we mentioned that we believe we are now at a stage where it's stabilized.
So we also spoke about ranges.
So when we are now with all customer was about 125%.
And you know when we think about the range probably the range as we expect these between 120 to 125, if we think about 10 plus users is 135 to $1 40, and when we think about enterprise customers with 50, K, it's around $1 45 to 150 and above so potentially there.
This is kind of the.
The ranges that we believe.
That are going to be winter does to gross retention.
When we look at gross retention, obviously is getting better the fact that you're actually getting more momentum with customers with 10, plus users and enterprise accounts also improving our gross retention.
We usually don't disclose this number but.
But this is getting better as we continue to move upmarket.
Okay understood one one follow up for you all around.
You said, you're seeing some softness in Europe , you said it.
And use it to July I see the upside.
To the revenue guidance is a little bit versus prior.
Yes.
Is there a pause is it possible to kind of estimate what kind of.
Yeah.
Are you modeling at this point and what type of assumptions are you baking into the guidance.
So naturally when we looked at guidance, we take into account all of the numbers.
A number of considerations inclusive also of course, the geopolitical situation as well as the FX impact and other macro economy.
The environment that that is out there. So you know this is part of the way. We measure. This is part of the way we do our projections. So we take it into account altogether.
Understood. Thank you.
Yeah.
Thank you. Our next question comes from Brent Brazilin of Piper Sandler Brent Your line is now open.
Thank you for taking the question here I wanted to go back around some of the momentum Youre seeing here with the enterprise customers you vendor consolidation as a narrative, we're starting to hear a little bit more about you've obviously came out what to do work out last platform that expands our reach into to CRM Dev.
Our kitting.
Are you seeing that play out and drive some of the momentum record number of enterprise customers this quarter or not is that a narrative.
Lean in more on just love to get your views around the opportunity you see with kind of your low cost platform, a given vendor consolidation as a narrative, we're starting to hear a lot more in the enterprise space.
Yeah. Thanks, Brian . So this is Ron so I mean definitely.
We see this as a great growth driver.
I don't think we're going to see like immediate impact in terms of our already great momentum in the enterprise customers.
Take some more time to kind of have another growth on top of the already existing growth that we have but definitely in terms of consolidation. This is something that that's really helpful. So the timing was really rise considering what we've seen in the market and if you think about it Monday is literally one of the best platform to do consolidation on because.
From day one.
Monday was very flexible very generic allowed an end customer or do you use it for many use cases. So what are your customers even before I was going to happen now in the market abuse Monday for a variety of use cases. Some companies ran all the departments. They use cases on top of our platform. So I think we're in a great position as a company to offer.
That consolidation happened with customers in the past and definitely we see in dose conversation right now and and we were pushing that through our customer success and sales team and congrats your feedback from customers is going through this process, so definitely something where the where the big upside that we have as a company and we will continue to offer that to our customers as well.
Go for it.
That's helpful color and then just eller on it if we just think about maybe the past path to positive free cash flow here you have certainly a very strong balance sheet over $800 million of cash only burnt 14 million, but how much of that cash position do you think youre going to need to consume.
Before you kind of get to positive free cash flow. Thanks.
Hey, Brian I said it on so with regards to free cash flow maybe to start and say that we expect margins in age two to improve our as part of the business growth I don't want to tell you. The exact number of how much we're going to consume but I think if we continue to deliver the growth.
And improved margins as we see now so potentially with regards to free cash flow as we said in the past is going to be low double digits are you know free cash flow as a percentage of revenue by the end of the year and that would assume that somewhere in next year in H, two we're going to see a shift.
Words breakeven or some free cash flow positive. So this is kind of the plan.
If you think about the ranges where current consuming.
I expect it's not going to be very meaningful from our total cash.
Helpful color. Thank you.
Okay.
Thank you. Our next question comes from Andrew de Gasperi of Diamondback Angie. Your line is now open.
Thanks for taking my question I know this has been asked.
Several times on this on this call, but in terms of the annual guidance what I just wanted to make clear is you flagged the weakness in Europe .
And you said that you are accounting for that.
But are you also accounting for any additional potential weakness in other regions or end markets as part of the guide.
For the year.
Yeah.
Hey, Andrew It's a live on you know when we look at the guidance the exam and wide range of potential outcomes and set our guidance to the level that we feel confident that we'll be able to meet and exceed.
And certainly the wide range of potential outcomes include the macroeconomic environment.
It could be worse and potentially the Gulf coast, the Gulf political situation can be longer than expected. So we try or we make sure that we take it into account account to a certain extent, we don't want to be completely conservative or pessimistic. So we take all of this into account when we do the projections.
Thanks for that and then just one on your pricing strategy. I know you haven't raised prices. Since 2019, just curious to know given the inflationary wage pressures a lot of companies are facing are you thinking or changing battery, taking a closer look at it.
Okay.
Yeah, Andrew this is wrong so.
We haven't made any significant changes to our pricing structure. If anything we always tried to make it easier and simpler for our customers I would say as we mentioned we have a big upside with our new work with products that offer us the ability.
To charge a premium over our work management platform, while again this value to our customers. So definitely this is a this is a big upside that we have also in terms of pricing and in engagement and usage. We also see this as a potential to increase the number of seats within accounts.
That's a big upside that we have in terms of pricing, but in regards to our kind of basic our pricing model. We don't expect to see any kind of changes right now yeah, Hi, It's Roy I would add that.
Given our motion to enterprise we see.
A lot more and the percentage of seats, which are enterprises within our revenue is growing so it is not a price increase but it is like and much more significant portion.
Thanks for that.
Okay.
Yeah.
Yeah.
Thank you. Our next question comes from David Hynes of Canaccord, David Your line is now open.
Hey, good morning, guys. Thanks for taking the question.
So R&D spend ticked up a little bit right, you're clearly investing in product I'm curious what what do you see as the more significant opportunity is it is it horizontal expansion of work all with our vertical expansion.
Hi, sorry.
So we actually.
She books like are the reason, we launched the products too because we saw oh far past horizontal and moves what customers actually did with US we took that and and launched the product. So we can go deeper inside each one and and be best in class within every vertical.
What happens outside these products sees the customers onboard to the workhorse and still use us for many more use cases, which we in the future will probably turn into products is what so are there all of these products to move was actually to get deeper into areas.
Yeah, Yeah, Okay, and then a follow up for earlier on just the softness youre seeing versus your expectations is that showing up more in top of funnel activity or expansion momentum.
Okay.
Hi, D J till it on I think it's both on one hand, when you think about the expansion. So the conversations are different if you think about companies now the sales cycles are taking longer companies are taking some of the companies out there are making decision with regards to the level of spend with regard to the level of expansion. This is on the extension.
On the top of funnel when you get into new audiences are definitely <unk>.
Stand or the online spend as companies are doing is different and therefore, there is I believe some slowdown in this environment as part of the macroeconomic challenges.
Yeah, Okay makes sense. Thank you guys for the color.
Okay.
Our next question comes from Derrick Wood of Cowen and co. Derrick Your line is now open.
Oh, great. Thanks, guys, it's Andrew on for Derrick next quarter.
The Renault group was an impressive when they have a 170000 employees was this a displacement or greenfield them could you give us any color of how many seats. This deployment is and then.
To reach close to 50, K C level, what would need to improve on the product to get to those levels.
Could you just repeat the first part of your question you were breaking up a little bit.
As far as sorry.
No group was impressive.
They have 170000 employees just trying to get a feel for the size of this by seats in and whether this was displacement or greenfield.
Okay. Yes. This is Iran. So it's it's a very significant deployment, we didn't disclose the amount of seats, but it's a very significant and deploy.
Deployment.
I would say a few hungry that's more to the kind of top part, but definitely this is you know.
Collyn that we play a very strategic role in and will continue to expand our footprint within this account part of the reason, we're so excited and it's also the upsell opportunity that we have with that customer and the ability to expand for more departments overtime.
And this is just one use case out of many that we saw this quarter with larger enterprises to adopt Monday on a while on a big scale and continue to scale over time.
Hum.
Just a question sorry.
Yeah.
To get to yes, just to get to the higher sea level numbers to that.
Like to get to 50, K plus seats, what would need to improve on the product side to get there.
Yeah. So I don't think it's much of a things that need to be improving with the product, although we keep investing more and more in terms of product features that allow enterprise companies. The scale first of all it's a process companies go in and add scale over time gradually.
So we definitely see this as a process a future enterprise customers are now growing and this is part of the reason why we see so much momentum in that group.
But you know our our sweet spot is still under 10000, we continue to invest and raise the bar every year are and will continue as a company to invest in a lot of the larger enterprise to use Monday, both from a security perspective governance and also in terms of features we heavily investing into that part of the business.
Great. Thanks, and then L. Iran. On the billings number was there anything the upside was a little softer is there anything invoicing flexibility wise to customers that impacted this and is this expected to persist into the second half.
Sure. So you know billings tend to be a bit lumpy and we do not measure the business and manage the business to billing we look at our net dollar retention rate revenue growth and.
Customer growth you should think about revenue growth on a sequential basis, we grew 14%.
So by quarter and 75% year over year. So this is the measures that are or the metrics that we used to look when we look at the business as well as comparisons on a more difficult this quarter when we are getting bigger.
The numbers.
Great. Thank you.
Thank you. Our next question comes from Brent Thill of Jefferies. Brent Your line is now open.
Thanks, I was curious if you could update us on your quota carrying sales rep hiring plan for the year you changed your plan relative to kind of what Youre seeing can you just give us any color and what you're expecting this year.
Hey, Brian do you sell it on so with regards to quota carrying would be changed the plan.
The group continues to grow this is another area.
R&D that we invest and continue to invest even with the current environment.
So it depends on demand as we see them when we did the plan for the year.
And just real quick what you're embedding in your overall guidance or are you seeing any name a few.
That environment, and improving environment or slightly worsening environment, how would you characterize it.
Your guidance relative to the back half in your plan.
So as I mentioned earlier and most of my replies, we do account for the macro economy environment and the geopolitical challenges to continue by the end of the year again, I don't have a crystal ball and I don't think that's our expectations than anyone else, we're trying to be beat.
Cautious are remaining optimistic with regards to next year, but by the end of this year, we think it's going to be the same environment that we see today.
Thank you.
Okay.
Thank you as a final reminder, if you wish to submit your question. Please press star followed by one on your telephone Keypad now star followed by one on your telephone keypad.
Our next question comes from Robert Simmons of D. A Davidson Robert Your line is now open.
Hey, Thanks for taking my question and sorry, if my audio is a little off.
You have 30 App.
Or is there any cadence we expect that the number of apps that will become monetized over the next.
For years, and then are you, earning revenue on those that are currently monetize.
And for doing so.
Yeah, Hi, Robert this is a so definitely we have very good momentum.
Marketplace will continue to invest there.
And working with other third party developers and companies that to help them kind of developed apps and top of our marketplace. We.
We did launch our payment service.
In the marketplace, two quarters ago, and see great momentum, we see app developers moving from independent payment to use our payment system and also new developers that joined the marketplace using our payment system is still not significant I would say compared to our total revenue, but it's growing very nicely.
Definitely what were keeping tracking that and for US as we mentioned previously it's a very strategic part of our product and we see this as our ability to expand our use cases and offer long tail solutions for our customers. So definitely a lot of investments in terms of R&D and our focus over in the marketplace. So we're very.
With the momentum.
Yeah.
Great. Thanks, guys.
At this time, we currently have no further questions and therefore this concludes today's call. Thank you for joining you may now disconnect your lines.
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