Q1 2023 monday.com Ltd Earnings Call

Speaker 1: Good day. My name is Jean-Louis and I will be your conference operator today. At this time I would like to welcome everyone to monday.com's first quarter fiscal year 2023 earnings conference call. I would like to turn the call over to monday.com's director of investor relations Mr. Byron Stephen.

Speaker 2: Please go ahead.

Speaker 3: Hello everyone, and thank you for joining us on today's conference call to discuss financial results from monday.com's first quarter fiscal year 2023.

Speaker 3: Joining me today are Roy Mann and Eran Zemin, co-CEOs of monday.com, and Eliran Glazer, monday.com's CFO . We released our results for the first quarter earlier today. You can find our quarterly shareholder letter, along with our investor presentation, and a replay of today's webcast under the News and Events section of our IR website at ir.monday.com.

Speaker 3: Certain statements made on the call today will be forward-looking statements, which reflect management's best judgment based on currently available information.

Speaker 3: These statements involve risks and uncertainties that may cause actual results to differ from our expectations.

Speaker 3: 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.

Speaker 3: which are posted on our Investor Relations website. Now let me turn the call over to Roy. Thank you Byron and thank you everyone for joining us today. After a strong fiscal year of 2022, we are happy to say that we kept the momentum going with an exception on Q1 in fiscal year 2023.

Speaker 4: Despite the persistent uncertainties in the macro environment, we continue to invest in our growth and profitability at scale, and we are seeing the results. Q1 revenue totaled $162.3 million, an increase of 50% year over year.

Speaker 4: We generated a record $38.7 million in free cash flow during the quarter, and are well positioned in meeting our goal of positive free cash flow for the third straight year. Additionally, we are pleased to report that we are now guiding to positive non-GAAP operating profits for fiscal year 2023.

Speaker 4: Two years ahead of expectations. Eli Run will walk you through our guidance in more detail.

Speaker 4: Customers acquisition continued to be exceptionally strong. Our fastest growing customer segment remains the enterprise where we grew customers by 75% to 1,683 customers, marking a record number of quarterly net new enterprise customers. Equally impressive.

Speaker 4: has been the fast adoption and strong customer feedback of our Mandel sales CRM product. Customers love Mandel sales CRM as it's more customers and easy to use than traditional CRM tools.

Speaker 4: In Q1, we opened our Monday sales CRM to a selection of our existing customer base and the response has been tremendous. Total sales in CRM account accelerated to 5,441 accounts, representing a record number of quarterly net new sales CRM accounts. We are incredibly pleased about all the...

Speaker 5: where Accelity announced our plans for incorporating AI into our Work OS platform, which we already started implementing.

Speaker 5: The key components of our AI strategy, including increasing money.com users efficiency, increasing our own internal efficiency, and in the future harnessing the power of our proprietary data, spending over 200 different business protocols.

Speaker 5: This month, the first version of Monday AI Assistant is going live, with features such as automated test generation, email composition, and document summaries.

Speaker 5: All features which will greatly increase the efficiency, speed and general experience of our users.

In June , we are opening our platform to third-party developers to build AI apps on the Monday.com work OS, increasing collaboration and speed innovation. These apps will be available on our Monday AI Assistant infrastructure. And, generally, too, we are focusing on using the Monday.com.

our data to help future customers navigate the best ways to set up and maintain the most optimal workflows and automations.

as well as connect the right people to the right processes.

This can significantly improve money.com speed of adoption within companies and further enhance data-driven product development initiatives. This quarter will also delighted to kick off the first phase of MondayDB. As a reminder, MondayDB is a brand new data infrastructure from the Monday Work OS platform.

Enabling bigger workflows, larger boards and dashboards, more robust developer capabilities, and improved overall performance. Monday D.B. is being released in multiple phases over the next year, with each phase expected to boost performance and scale.

The first phase of MoneyDB is focused on Monday boards. Now available to 30% of accounts, MoneyDB 1.0 is already having a big effect on board performance and load times.

especially on large and complex boards.

MoneyDB 1.0 loads boards with thousands of items within a minute of seconds, allowing customers to work with bigger, more complex workflows than ever. We expect MoneyDB 1.0 to be rolled out to all customers by the end of Q2.

In addition to our innovation efforts, we continue to make strides in accelerating our efforts in building our apps marketplace.

app provider, the database group, join us for an app accelerated project.

The event focused on introducing several potential new apps, a super charging adaptive is first money.com app, unlimited subitems, which has quickly become a customer favorite.

Working with the larger enterprise apps providers such as Adaptaviz and Opfire will allow us to build a strong foundation and take our marketplace to the next level.

With that, let me turn it back over to Roy. Thank you, Aaron. We continue to make progress on our ESG efforts and leading publications are taking notice. Mandela Doscom's emergency response team recently received an honorable mention in the corporate social responsibility category of fast companies, 2023, world changing ideas list.

This prestigious list honors initiatives that use companies, platforms, and power to help advance change either internally, for the community, or for the world at large. To read more about our Emergency Response Team's effort and all of our ESG initiatives,

please see our recent published 2022 ESG report. None of our achievements this quarter would have been possible without our amazing monday.com team. We continue to invest in our people with recent opening of the new APAC headquarters in Sydney and increased our overall headcount in the quarter to 1582 employees.

We are grateful to all our employees for their hard work and their contribution to the strong start to fiscal 2023.

With that, I'll now turn it over to Eliran to cover our financials and guidance. Thank you, Roy, and thank you to everyone for joining our call. Today, I'll review our first quarter fiscal 2022 results in detail and provide updated guidance. We started the year exceptionally strong. Total revenue in Q1 came in at $162.3 million, up 50% from the year-ago quarter.

Excluding the impact of foreign exchange, revenue grew 51% year over year. As expected, our overall net dollar retention rate declined slightly in Q1, reflecting slower enterprise customer seat expansion amid the challenging microeconomy environment. We continue to expect moderate pressure on NDR throughout fiscal year 2023. As a reminder, our NDR is a trailing four-quarter weighted average calculation.

For the remainder of the financial matrix disclosed, unless otherwise noted, I will be referencing a non- GAAP financial measures.

We have provided a reconciliation of GAAP to non-GAAP financials in our earnings release.

First quarter gross margin was 90%. In the medium to long term, we continue to expect gross margin to remain in the high 80s range.

Research and development expense was 28.5 million, or 18% of revenue, in line with Q1 2022. We plan to continue investing significantly in R&D in fiscal year 23, as we build out our product suite and scale our work rest platform both horizontally and vertically.

Sales and Marketing expense was 102.7 million or 63% of revenue compared to 100% in Q1 2022. G&A expense was 15.8 million or 10% of revenue compared to 11% in Q1 2022.

Net income was $7.2 million, up from a loss of $43.2 million in Q1 2022. Diluted net income per share was $0.14 based on $50.8 million fully diluted shares outstanding. As Roy mentioned, total employee headcount was 1,582, an increase of 33 employees since Q4 2022.

We expect to continue hiring throughout fiscal 2023 with the focus on our R&D and product team as we build out our platform and product suite.

Moving on to the balance sheet and cash flow. We ended the quarter with 935.6 million in cash and cash equivalents, up from 885.9 million at the end of Q4 2022.

Free cash flow for Q1 was $38.7 million and free cash flow margin as defined as free cash flow as a percentage of revenue was 24%.

We now expect to report positive free cash flow on a consistent quarterly basis moving forward and to achieve our third consecutive year of being free cash flow positive in fiscal 2023.

Free cash flow is defined as net cash from operating activities, less cash used for property and equipment, and capitalized software costs.

Now let's turn to our updated outlook for fiscal year 2023. For the second quarter of fiscal year 2023, we expect our revenue to be in the range of 168 million to 170 million, representing growth of 36 to 37% year-over-year. We expect non-gap operating income of 2 million to 4 million and an operating income of 1.5 million to 1.5 million.

8 million to 12 million and an operating margin of approximately 1%.

I'll now turn it over to the operator for your question. We will now begin the question and answer session. If you have a question, please press star 1 on your telephone keypad. One moment for your first question.

Where the <expletive> am I? I'm fucking muted. No.

Your first question comes from the line of Cash Rangan of Goldman Sachs. Please go ahead.

Thank you very much. Congratulations on these fantastic results. It's always good to see Monday's results on a Monday. A question for you is if you look at the packaging of the Monday persona, or packaging of Monday based on individual persona, you have the CRM application right now. What other applications do you foresee coming down the research and development centre?

the capabilities of the platform forward towards our growth. So our strategy now is to focus this year on the core products that we have. Like CRM is doing amazingly well, and we're pushing on that. We're doubling down on what we're really good at, which is to lose the support, and go out she and Ben out and make the mi Orche safe climate where everybody is working. Whether you want to build your main water Would it since

project and work management and the dev is also out of beta and that's a great momentum there. Going forward when we're looking into where we are going into and where we are not, we're seeing Monday going into areas where it is very highly differentiated across the organization.

It's like, and we're building out within the company teams that focus on each specific product and taking it to be best in class.

And we're building out within the company teams that focus on each specific product and taking it to be best in class.

I have a follow up for everyone. Thank you, Roy. If you can expand on the generative AI capabilities and what kind of large language models are you guys taking advantage of? Is it your own model? And what is the future product strategy for generative AI on the Monday platform? Thank you so much. That's it for me.

Yeah, thanks, Cash. Thanks for the question. So, when we think about AI, and we mentioned that briefly in our intro, so we think about different aspects. One, our already capabilities that we added into the product. So, a lot of the things that you can do now with Monday could be automated using AI.

Whether it's creating content, meaning generating documents within a platform, generating tasks, so all that can be done using AI. Also, another aspect is to make the platform work for you, so automations, formula, all those things that are considered to be low-code, we also enable with AI to further automate that. So that's one aspect.

The second aspect is making our own company more efficient, optimizing sales processes, customer success, and so on. So I think that in the long term, I have the potential to improve margins and to improve the company efficiency. But if I think about long term, Monday has a very unique data set.

If you think about it, we have customers across so many verticals, and they all use Monday in different ways. Over time, we generate so many ways of how customers work with Monday, how they leverage the platform. So it's really unique dataset. Going forward, we're thinking about adding capabilities that allow customers that are new to the platform, or want to explore more.

opportunities to the platform to generate for them different ways to work. So I think that can be a big game changer for us as a company. In terms of vendors, we use multiple vendors, not one specific. We didn't build the AI capabilities themselves ourselves, but we're using different vendors and teach the AI using our unique data set.

Your next question comes from the line of pin jillim borah of jp morgan. Please go ahead.

Hey guys, this is Noah on Pendulum. Congrats on a great quarter and thanks for taking our questions. I just wanted to touch a little bit about the Monday DB infrastructure upgrade. Could you maybe just provide some context as to what the customer feedback has been since rolling that out and just any more color around it would be really helpful.

I also have a quick follow-up. Thank you.

Yeah, thanks, Benjamin. This is Aran. So, first of all, we're very excited with the progress of MondayDB. Over our schedule in terms of releasing that to our users, it's now open to 30%. I would say that, generally speaking, from the customers, it's already open for them.

reactions are super positive, especially for the larger customers who have large boards. The user experience, high load times for their boards and content, that dramatically improved with the new MonoDB and reactions are super positive.

Our plans going forward is to further release this first version, MongoDB 1.0, to all of our customers by the end of Q2. And again, this is ahead of plan. We initially thought about releasing by the end of the year. But just to remind you, this is just version 1.0. Further, throughout the year, we're going to release.

additional versions with further improvements. So a lot of exciting things are happening, but overall very happy with the gradual release so far. Our reactions are super positive and there's a lot of things that will happen going forward.

Thanks. And then just for a quick follow up, you know, you know, what are some of the delivers you're pulling to drive the strong guidance on margins? Thanks.

So when we were looking at guidance, what drove the beans was, we did 7 million or more on the revenue side. On the expensive side, we had the 5 million less of expensive due to improved operating of the marketing expenses as well as less consultants that we anticipated.

In addition, we have some additional OPEX savings across multiple operating expenses like headcount, the fact that we were below planned slightly, travel, and other operating expenses that we achieved some savings.

And when we look into guidance, we always take into account the latest trends that we are seeing. So obviously we are looking at currently the challenging macro economy conditions that probably are going to continue to apply some moderate pressure on NDR. So we're looking at around 110% overall NDR for all populations and around 115 to 120 for 10% overall NDR.

anticipate will contribute to the growth of the business. So we took all of this into account when we did the guidance for the year.

Your next question comes from the line of Jackson Eiter of SVD. Please go ahead.

Thanks for taking our questions, guys. The first one is, I think, on the continued growth. You had to think about what...

Has there been a change in the competitive environment that's allowed you?

To maybe win more deals from legacy competitors, is it the same story that we've seen other competitors start to recede in their investments? Can you rank order some of the things that are...

causing the outperformance on the top line. Yeah, hi Jackson, this is Aaron. So, I don't think we can pinpoint one specific factor but I would say the fact that Monday offering is so broad it's not exposed to one specific, you know.

sector. Also, just to remind you, 70% of our customers are non-tech, only 30% are tech. I think we have very high stability in our customer base. Also, we continue to see very strong demand. We doubled our marketing, we still have been very bullish.

There's more demand than ever before. And I think the quality of customers that are joining us right now is even higher than before because given what's happening in the economy, everybody's searching for a solution, are really kind of putting a lot of effort into that. So I think all those things combined create a great environment of opportunity for us as a company.

big brain in our ability to actually look at every campaign and see the returns while others pull back we actually double down on our investment. So we continue with this playbook of Monday when we see good returns we continue to invest and this is something we believe is providing us with differentiation versus our competition.

Okay, all right, great. And then the follow-up is, I guess, more conceptual. When you guys talk about focusing on the core product and kind of letting the third party,

develop the vertical specific applications, you know, like going deep in their own vertical. I'm curious how that actually works. So what happens if somebody goes really deep on a specific vertical and then, you know, are you guys then

maybe subject to having to maintain or develop capabilities on top of this industry specific stuff that maybe you didn't plan on. And so your product roadmap kind of gets out of, I don't know, like out of your skis. I'm just curious how that will work maybe two years from now.

Hey, it's Roy. So that's a great question. Actually because Monday is a platform, a true platform and an open one, everyone can develop whatever they need. So whatever builders want to build, they never hit the wall because it's all open. They can develop their own.

missing capabilities for that vertical. And that's why we're also opening it up for them. So essentially, it's never going to limit us.

What it will do is provide a lot of very wide feedback on where we should take the platform. And those capabilities that we offer developers are also the same ones that we are ourselves are developing our own product.

So we are completely aligned with our ecosystem and so it's one roadmap and like just helps us speed up in those long tails that we would probably not go into anyway.

Your next question comes from the line of Arjun Bhatia of William Blair. Please go ahead. Hey, guys. Thanks for taking the questions. Maybe I just wanted to circle back on the product solutions. It seems like CRM is doing really well. It looks like you doubled the – more than double.

vendor consolidation at your customers? Is that something that can increase as those get introduced to the market?

Yeah, Arjun, this is Ron. Thanks for the question. So, as we mentioned during the call, so CRM is going really well. Also, that product is gaining a lot of momentum. We actually just announced it out of beta. So, this is another product we're very excited about. Already seen great times of very good momentum in terms of acquiring customers.

The project management, we actually kind of renamed that to work management. It's a broader category. Again, this is the bread and butter of Monday. We continue to double down on that, adding more features and capabilities. And in terms of marketing, we actually consolidated that into the work management as it's much more of a vertical of work management.

And going forward, we plan to release more kind of horizontal large products like that. So overall, when we look at the overall strategy of packaging the platform into products and adding more deep features and capabilities, we're very pleased with the progress and how it's going.

And already now we've seen signs of our ability to cross-sell those products and having customers with multiple products being sold to them, whether it's up front or after the initial purchase of one product. So I think going forward, this is a lot of upside baked into our model. Perfect. Thanks, Iran. And then one for...

coming from? Does that tend to be displacements or are you seeing expansion into new customer segments? Any color layer would be helpful.

So with regards to NDR in general, as we said, we continue to see slowdown in expansion of fees compared to a year ago. Larger customers especially have become more cautious with their budgets. You know, if you think about what happened in Q3 and Q4 of last year, and we believe it's going to persist by the end of this year as well.

On the positive side, we believe that the NDR decline has been offset by strong customer acquisition. So the fact that we are actually seeing a very healthy top of final activity with the expansion into CRM and DEV and other use cases is going to bring, we believe, next year some recovery on that front.

It's important to say that the growth retention has remained stable. This is something that we are very much encouraged by. And as part of going up markets with enterprise accounts, we're also lending in larger customers from day one, so extension is probably going to be a bit more slower. All right, perfect. Thank you so much and congrats on the strong quarter guys.

has remained stable. This is something that we are very much encouraged by and as part of going up markets with enterprise accounts, we're also lending in larger customers from day one so extension is probably going to be a bit more slower. All right, perfect. Thank you so much and congrats on the strong quarter guys. Thank you.

Your next question comes from the line of Brent Braceland. Please go ahead. Good morning. Thank you. I wanted to go back to the demand picture here. Clearly I get we're in a challenging environment, but the strength of demand here is impressive here in the quarter and the outlook. We're going to get to moderating NDR.

What's driving the optimism here for you guys here for the guide up for June and full year? Is it larger new lands? Are you really excited about the CRM cross-selling to the installed base? Maybe a mixed shift to higher tier pricing? Just walk us through what's driving your near-term optimism with the caveat of the challenges you face. Thanks. Hi, Brian . This is Elievan. Uh, no.

We are seeing strong customer demands of our walk-away platform and product 3 basically around all customer segments. So this is not something that we can call out that is unique. It's across the board having in mind the multiple use cases that we have and again the fact that 70% of our customers on Nantec also provide us with some strength.

On the other end, as we said, we continue to see a slow enterprise customer shift expansion, but this is mostly related to the challenging macro environment. However, if you think about where we see the strength is the largest number of net new enterprise customers in the quarter came this quarter. This is the biggest, I think more than 250,000 customers.

fine and which pay up front. So I believe all these things together with the additional add-ons and functionalities that we are adding, Monday DB that mentioned earlier is providing us with some positive view for the rest of the year Q2 and fiscal year 23. Helpful color there sounds like pretty broad base strength. Last question for me is just Reiss over this report.

million dollar question. So what we are trying to do is obviously we are going to continue to invest in the business. Priority number one is organic growth, reinvesting, growing the company. We have a lot of initiatives expanding the platform, the products, the operations. We are going to continue to invest in the business. We are going to continue to invest

and obviously a global reach to build the market share further. Bear in mind that Bandai is a very innovative company. So this is something we would like to continue, not only thinking about 2023, but also on the longer term 2024 and beyond. We're also thinking about potentially, you know, when the market now is becoming more normal, potentially there are going to be opportunities for an MMA.

Your next question comes from the line of Steve Enders of Citigroup. Please go ahead. Is there anything that you're like, oh, I'mIFF you're like for to the

Great, thanks for taking the question here. I guess I want to ask on the kind of customer feedback from CRM now that it's being sold and pushed back into the customer base. I mean, are you primarily seeing like net new CRM use cases coming from that, or is there some level of converting customers over who may already be using some of that?

the smaller ones, the more rigid ones, and they see in Monday the flexibility that they need to really operate their business, and then they're maturing from an existing CRM. But the CRM space is also a huge area in digitization. A lot of customers are coming from literally nothing and we're...

Okay, gotcha. That's helpful context there. And I guess on the competitive outlook and kind of what you're seeing out there in the marketing world, how should we think about like, you know, where we are in terms of the cost per cost per ad at this time and

Has there been any change in the environment out there in the past quarter versus maybe we were seeing in the back half of last year? Yeah, still really so. I would say we're still seeing the cost per ad and media is...

Still way cheaper than it was a year ago, and I think it stabilizes now compared to a quarter ago. It's not dropping anymore. But that still puts us in a very good place, and we're still gaining market share compared to let's say last year.

So for us it's a really good space and it's one that the costs are moderate and very good. And as well, like Erhan mentioned before, the customers we're gaining now are also ones that really are looking for solutions. It's not a nice to have for them. They really are looking for them.

if they're to put their money in there so they're like better customers on average than we would have seen like a year ago. Your next question comes from the line of Jason Delino of KeyBank Capital Market. Please go ahead.

Great, this is Devon on for Jason today. Thanks for taking our question. Maybe just one from us. Wanted to double click on the strong enterprise customer net ad of 200. Really nice acceleration there. Just want to ask, are you seeing more opportunities in the marketplace just because you now have more products?

For example, the Monday Devs out of beta, or is it just attributed to the strong go-to-market team execution there that drove the acceleration? Thanks.

Thanks for the question. This is Aran. I don't think it's specifically related to Monday CRM or that. I think it's more about our continued momentum and our investment into the enterprise tier. We keep adding features and capabilities, keep scaling our sales team and partners team. I think that's the result of our investment. We continue to invest and accelerate that part of the business.

So I think that's kind of our focus has been as a company for the last few years and we continue to double down on that. Your next question comes from the line of Brent of Jefferies. Please go ahead.

Thanks. Just if you could double click on the enterprise strength and ultimately what you're doing to help build out that good market to continue the impressive penetration upmarket.

Yeah, Brent, this is Aran. Thanks for the question. So I think it's pretty much what I said about a continuous demand. I think MoneyDB is definitely something that we see that will help to accelerate our ability to not just acquire enterprise customers but also to scale them.

And we also see a trend where we see enterprise customers laying bigger on initial deals, meaning customers upfront are buying bigger licenses and seats. So I think that's another very positive trend that we've seen. Maybe putting a little bit of pressure on MDR, but overall, a very good trend that we've seen.

And again, we continue to develop a lot of, apart from an ADB, a lot of features around security, admin, permissions, which just released a bunch of features. So I think all that investment really drives the enterprise growth. And just real quick in terms of your assumptions in the back half of the year, I think you beat Q1 by roughly seven.

to count the fact that basically we have a strong Q1 so it's going to impact the rest of the year so we definitely kind of account for that when we provided the guidance for the year. As I mentioned earlier although we had some of the rate pressure on NDR we assume that we are going to continue to see positive around 110.

overall NDR for entire customers and around 120 for the 50k NDR. So if we continue to see the top of fund of demand and we continue to see strong new customers growth as we've seen together with the overall efficiency and cash generation.

line of Scott Berg of NEETAM. Please go

Hi everyone, thanks for taking my questions. Apologies for the background noise here. I want to start off talking about other applications on the Monday Work OS with the success of your CRM solution. Can you envision a world, maybe a year, three, four years from now, that you'll build other prepackaged applications versus...

Monday Work OS, you've had success with CRM, but instead of having it just be a freeform platform that customers can build themselves on top of, how do you think about adding other kind of rebuilt applications?

Yeah, got it. Thanks, Scott. This is Aran. Yeah, definitely we've seen success with CRM and Dev. Obviously, work management is a huge one for us years ago. Going forward, we're probably going to add a few more core products to our product suite.

might be HR, might be other categories we're going to double down on. So, you know, we're open on adding new products. We see a lot of opportunity within our own customer base. We see demand from our own customer base. So definitely there's opportunity there and the results from CRM and also that now are very encouraging.

And like we mentioned, for the long tail, we're going to open it up for third party vendors to extend our product suite. But overall, you know, if you can ask me to vision envision Monday to 3 years. I see a company offering a very strong product suite, maybe 4 or 5, 6 potential products that are kind of core to the company.

In addition to a long offering of long tail solutions from different kind of more nuanced, vertical industries. So that's how can I envision the Monday's going forward? Yeah, hi, it's Roy here. So I can add that we have a lot of visibility into what's working and what's not because like you said,

that is out there. So we have great visibility into the areas that we might go into next, some of them Iran mentioned. Excellent, thank you. For my last question, I wanted to talk about traction within your partner ecosystem.

They continue to extend our ability to sell across different regions. But also, I think some trend that we've seen that is increasing is their ability to do professional services for our customers. As we go upmarket with larger enterprises, I think the fact that our enterprises help onboard those customers and develop customized features for them really helps us scale our enterprise offering. So, we see great momentum with our partner ecosystem. It's a great extension of our ability to sell, and we continue to invest in that part of the business.

Again, if you would like to ask a question, please press star 1 on your telephone keypad and we please ask that you try to limit yourself to one question. Thank you. Our next question comes from the line of George Iwanick of Oppenheimer. Please go ahead.

Thank you for taking my question and congrats on the strong results. Aran, maybe building in a little bit more color on your AI commentary, how do you see this changing the competitive landscape? Do you see this as a net positive? How do you see it changing the seed growth opportunity?

Hey Roy, so we're super excited about AI because when you think about it, Monday has always been a place where customers, we gave customers more power to build their own software, more power to run their own businesses in the way that they...

It's too early to say like what competitive edge it will give us, but as a leader in this category, I feel like it's a great opportunity for us and definitely going to be like huge values for customers and then like we're super excited about it.

Your next question comes from the line of Derek Wood of TD Cohen.

Hey guys, thanks. A lot of questions on the enterprise side, which is great to see. Maybe I'll take the other side of that and just ask about the SMB cohort. Just give us a sense for how that's trending. Has there been any change in churn rates? What are you expecting through the year? And an update and focus at the lower end of the market?

Thanks, Derek. I think it's a great question because obviously we put a lot of focus on our enterprise segment. I think if anything in the last few quarters, I think SMBs also showed their strengths. I think the fact that we have a mixture of SMBs and SMBs is a great example of what SMBs

both enterprise but also SMBs as part of our business model really was a big benefit for us as a company. Surprisingly SMBs net retention was pretty much stable given the current economy. We saw SMBs stabilizing on Monday adding more solutions, unifying different tools into Monday.

So I think that's a very interesting segment in the long term as well. So if anything, it just assures the fact that we need to double down, not just in enterprise, but also the SMBs like we've done throughout the years. And we see a lot of stability in that part of the business. Obviously, keep investing, but very interesting dynamic here.

Our next question comes from the line of David Hines of Canaccord. Please go ahead. Hey, thanks guys. Two quick ones on Monday DB. So, with the phased approach to the roll out there, the 30% of accounts that are live, did you start with your largest customers who would see the most benefit or how did that play out? And then

Second, Aran, I'd love to hear you talk a little bit about what v2 and v3 of that effort looks like. Like where will the focus be in future iterations of Monday DB? Yeah, thanks DJ. So overall when we started initially we saw with the smaller accounts but then we just opened up for different sizes of accounts. Some of the largest accounts were

I would say the most eager to get MoneyDB, so we actually rolled those accounts sooner. So now we have a mixture of both small accounts but also very large accounts using MoneyDB. The most gain was obviously in the larger accounts. Small accounts didn't experience much lag but the larger ones did. So we saw most of the benefit over there. Version 1.0 is focused mainly on consuming data and viewing data where...

The next two versions are going to focus on different parts of the platform. For example, dashboards are going to be blazing fast going forward. We're going to offer more scaling opportunities, so that means larger data sets. And I think those further assessments in the product will be a big game changer because it will just allow us to be significantly better than where we are today and offer significant different customers.

the ability to use Monday. So looking forward for the next version. I think the first step is always the hardest and the next phases will be easier to implement. Your next question comes from the line of Andrew DeGaspary of Bergen, sorry, of Berenberg. Please go ahead. Thanks, good morning and thanks for fitting me in. I just had a one.

in terms of the customer adoption, could it be similar to Monday CRM in terms of how quickly you think that could ramp up?

Thanks, Andrew. So, yeah, Monday Dev is now out of beta. It doesn't mean that all the features are out there. It's far from where we want our product to be. We have a lot of exciting features we plan to roll out. We just reached a place of stability and scale that we feel comfortable.

migrating Monday day out of beta. We've seen great momentum. That's one of the reasons why it was important for us to emphasize that. It's hard to compare it to CRM because it's kind of earlier phase of the CRM, but we're very encouraged from seeing the momentum that we've seen in the product. And overall, when I look at both the CRM and the dev, we're very pleased with the rate of adoption, with the feedback that we're getting.

and you know if the momentum gives its way this is a great win for us as a company. Your next question comes from the line of Shelby Seyrafi of FBN Securities. Please go ahead.

Yes, thank you very much. So I'm very impressed by your billings growth, which was 43%, up from 41% in Q4, and it came in 11% above consensus versus in line basically the prior two quarters. So what drove that strong billing speed? Was it pricing? Was it enterprise? Was it geo? Any other factors? Any official numbers to forestall?

So as a reminder we said that billing is an imperfect measure of the underlying health of the business. It's a bit lumpy. We look at revenue growth, we look at the new customers. Nevertheless, we did see strong new customers demanding Q1. The combination of 80% of the contracts are now annual.

paying up front, also contributing for the fact that the billing number has gone up. In addition, the largest number of enterprise customers in the quarter, we added more than 200 enterprise customers. The combination of these two drivers together with the strong top of funnel activity, you know, drove the billing up.

or vertical or a geography that's been the most receptive to it? Can you repeat the question?

Yeah, I was wondering on sales CRM where have you seen the most receptivity to it? Is it been certain verticals or geographies or you can call it there, that would be helpful. Yeah, thanks Robert. So I can't point on any specific segment or industry. I think that was pretty much across the board.

different industries, different verticals, looking for a CRM solution. I think what was surprising for us is that there's a good balance between customers looking for kind of their first version of CRM, but also a lot of customers migrating from existing solutions. They've been using a CRM for different reasons, to mention their sales operation.

and now they wanted to kind of go to the next level and but Monday CRM in pretty large percentages. So that was you know interesting kind of insight into those customers. We just now in the last quarter started to open it up for our existing customers.

And going forward, we plan to offer that solution kind of more proactively. So, it's also upside to that. Thank you. If there are no further questions at this time, I'd like to turn the call back over to Byron for closing remarks. Thank you, everyone, for joining the call today and hope you have a great day.

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