Q1 2024 Monday.Com Ltd Earnings Call

Mark: Thank you for standing by. My name is Mark, and I will be your conference operator today. At this time, I would like to welcome everyone to the Monday.com first quarter fiscal year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by my name is Mark and I will be conference operator today at this time I would like to welcome everyone to the Monday Dot Com first quarter fiscal year 2020 for earnings Conference call.

All lines have been placed on mute to prevent any background noise.

Mark: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the call over to Byron Stephen, Vice President of Investor Relations. Please go ahead.

Speaker Change: The speakers remarks, there will be a question and answer session.

Speaker Change: I would like to ask a question. During this time. Thank you Brent Star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star one again.

Speaker Change: I would now like to turn the call over to Byron Stiefel, Vice President of Investor Relations. Please go ahead.

Byron Stephen: Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for Monday.com's first quarter of fiscal year 2024. Joining me today are Roy Mann and Eran Zinman, co-CEOs of Monday.com, and Eliran Glazer, Monday.com CFO.

Speaker Change: Hello, everyone and thank you for joining us on today's conference call to discuss the financial results for Monday Dot Coms first quarter fiscal year 2024.

Speaker Change: Joining me today are Roy man in Iran, Zinman co Ceos of Monday, Dot com and all of the wrong laser Monday Dotcom CFO.

Byron Stephen: We released our results for the first quarter of fiscal 2024 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. Certain statements made on the call today will be forward-looking statements, which reflect management's best judgment based on the currently available information. These statements involve risk and uncertainties that may cause actual results to differ from our expectations.

Speaker Change: We released our results for the first quarter of fiscal 'twenty 'twenty four earlier today.

Speaker Change: 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 Dot Monday Dot com.

Speaker Change: Certain statements made on the call today will be forward looking statements, which reflect managements best judgment based on currently available information.

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

Byron Stephen: 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 statement. Additionally, non-GAAP financial measures will be discussed on the call today. Reconciliations to the Most Directly Comparable GAAP Financial Measures are available in the earnings release and the earnings presentation for today's call, which are posted on the Investor Relations website. Now, I will turn the call over to Roy.

Speaker Change: 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.

Speaker Change: Additionally, non-GAAP financial measures will be discussed on the call today Rec.

Speaker Change: Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on the Investor Relations website now let me turn the call over to Roy. Thank you Byron and thank you everyone for joining US today following an exceptional year of growth and progress we are three.

Roy Mann: Thank you, Byron, and thank you, everyone, for joining us today. Following an exceptional year of growth and progress, we are thrilled to report that 2024 is off to another strong start. In the first quarter, Monday.com showcased outstanding business and financial performance, highlighted by increasing adoption of our new products, robust revenue growth, and record-level free cash flow. Meanwhile, underlying product demand remains strong across all business segments. Despite lingering macroeconomic uncertainties, customers continue to build on the WorkOS platform due to its ability to streamline workflows, enhance collaboration, and drive efficiency, ultimately empowering organizations to adapt and thrive in challenging environments.

Roy: To report that 'twenty 'twenty four is off to another strong start in the first quarter Monday Dotcom showcased outstanding business and financial performance highlighted by increasing adoption of our new products robust revenue growth and record level of free cash flow.

Roy: Underlying product demand remains strong across all business segments. Despite lingering macroeconomic uncertainties customers continued to build on the work OS platform due to our ability to streamline workflows enhanced collaboration and drive efficiency.

Roy: Ultimately in powering organizations to adapt and thrive in challenging environments.

Roy Mann: One of the key drivers behind our remarkable Q1 performance was the adjustments made to our pricing model. As a reminder, our pricing model structure is being rolled out in waves. For new Monday customers and those billed monthly, new pricing took effect in Q1, while other customers will see updated pricing upon renewal. So far, the results from our new pricing structure have exceeded our initial projections. Underscoring the strong value proposition of our products, we are particularly pleased with the initial churn data; overall gross retention reached an all-time high in Q1, continuing its upward momentum over the past year. Let me now turn it over to Eran to walk you through some of our product highlights. Thank you, Roy.

Roy: One of the key drivers behind our end market. Both Q1 performance was the adjustments made to our pricing model as a reminder, our pricing model structure is being rolled out in waves for new Monday customers and those billed monthly new pricing took effect in Q1, while other customers will see updated pricing upon renewal.

Roy: Yeah.

So far the results from our new pricing structured have exceeded our initial projections underscoring the strong value proposition of our products. We are particularly pleased with the initial churn data overall gross retention reached an all time high in Q1, continuing its upward momentum over the past year.

Speaker Change: Let me now turn it over to Iran to walk you through some of our product highlights.

Eran Zinman: In Q1, our vision of becoming the go-to work platform for businesses took a significant step forward with the opening of Monday Sales CRM and Monday Dev to all customers. The response has been incredibly positive, with both products showing accelerating account growth in Q1.

Iran: Your ROI in.

Iran: In Q1, our vision of becoming the go through work platform for businesses took a significant step forward with the opening of Monday sell CRM and Monday Dev to all customers.

Iran: The response has been incredibly positive.

Products, showing accelerating account growth in Q1.

Eran Zinman: In addition, we remain on schedule to launch the new Monday service product in late 2024. Looking ahead, we're committed to further investment and promotion of all our current and upcoming products to address the needs of customers of all types and sizes. Our mission to empower anyone with the ability to harness AI continues to make progress. Building upon the successful launch of our AI system, we recently introduced enhanced AI capabilities, including AI automations, smart columns, and AI-powered templates.

Iran: In addition, we remain on schedule to launch the new Monday service product in late 2024.

Iran: Looking ahead, we're committed to further investment and promotion of all our current and upcoming products to address the needs of customers of all types and sizes.

Speaker Change: Our mission to empower anyone with the ability to harness AI continues to make progress building. Upon a successful launch of our AI assistant we recently introduced enhanced AI capabilities, including AI automation smart columns and AI powered templates.

Eran Zinman: These new features enable customers to leverage the power of AI throughout the WorkOS platform, unlocking significant business value and seamlessly integrating AI into their daily workflows. Looking ahead, we remain steadfast in our commitment to driving growth at scale. Delivering value to our customers and shaping the future of work through innovation and excellence. Our focus on product innovation, customer success, and operation efficiency will continue to drive momentum and position us for success in 2024 and beyond. With that, I'll now turn over to Eliran to cover our finances and guidance. Thank you, Eran, and thank you

Speaker Change: These new features enable customers to leverage the power of AI throughout all workhorse platform unlocking significant value as seamlessly integrating AI into their daily workflows.

Speaker Change: Looking ahead, we remain steadfast in our commitment to driving growth at scale.

Speaker Change: Delivering value to our customers and shaping the future of work through innovation and excellence.

Speaker Change: Our focus on product innovation customer success and operation efficiency will continue to drive momentum and position us for success in 2024 and beyond.

Speaker Change: With that I'll now turn over to <unk> to cover our financials and guidance.

Eliran Glazer: Thank you, Eran, and thank you everyone for joining our call. Today, I'll review our first quarter fiscal 2024 results in detail and provide updated guidance. Fiscal year 2024 is off to another strong start. Total revenue in Q1 2024 came in at $216.9 million, up 34% from the year-ago quota. Our overall net dollar retention rate was stable in Q1'24 at 110%, reflecting the recent pricing updates and strong downmarket demand for our work operating system products. We currently anticipate reported NDR to remain stable throughout fiscal year 2024, with unexpected small improvements by the end of the year.

Speaker Change: Thank you Ron and thank you everyone for joining our call today I'll review, our first quarter fiscal 2024 results in detail and provide updated guidance.

Speaker Change: Fiscal year 'twenty four is off to another strong start total revenue in Q1 'twenty four came in at $216 9 million up 34% from the year ago quarter.

Speaker Change: Our overall net dollar retention rate was stable in Q1, 'twenty four it's 110%, reflecting the recent pricing updates and strong down market demand for our work operating system products. We currently anticipate the reported MBR to remain stable throughout fiscal year 'twenty four with an expected small improvements by the end of the year.

Eliran Glazer: As a reminder, our net dollar retention is a trailing four-quarter weighted average calculation. In Q1, we updated our list prices to better align with the increased value provided by our WorkOS platform and product suite to our customers. These adjustments have outperformed our initial forecast, and we now anticipate that we will generate approximately $25 million in revenue for fiscal year 2021. For the reminder of the financial metrics disclosed, unless otherwise noted, I will be referencing non-GAAP financial measures.

Speaker Change: As a reminder, our net dollar retention is a trailing four quarter weighted average calculation in.

Speaker Change: In Q1, we updated our list prices to better align with the increased value provided by our work Oss platform and product suite to our customers. This is Jeff Mintz have outperformed our initial forecast and we now anticipate the regenerate approximately $25 million in revenue for fiscal year 'twenty four.

Speaker Change: For the remainder of the financial metrics disclosed unless otherwise noted I will be referencing non-GAAP financial measures. We've provided a reconciliation of GAAP to non-GAAP financials in our earnings release.

Eliran Glazer: 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.

Speaker Change: First quarter gross margin was 90% in the medium to long term, we continue to expect gross margin to remain in the high eighties range.

Eliran Glazer: Research and development expense was $34.8 million in Q1'24, or 16% of revenue, compared to 18% in Q1'22. Sales and marketing expense was $120.8 million in Q1'24, or 56% of revenue, compared to 63% in Q1'23. G&A expense was $17.6 million in Q1'24, or 8% of revenue compared to 10% in Q1'23. Net income was $31.7 million in Q1'24, up from $7.2 million in Q1'23. Diluted net income per share was $0.61 in Q1'24, based on 52 million fully diluted shares outstanding. Total employee headcount was 1,987, an increase of 133 employees since Q4-23.

Speaker Change: Research and development expense was $34 8 million in Q1, 'twenty, four or 16% of revenue compared to 18% in Q1 'twenty three.

Speaker Change: Sales and marketing expense was $128 million in Q1, 'twenty, four or 56% of revenue compared to 63% in Q1 'twenty three.

Speaker Change: G&A expense was $17 6 million in Q1, 'twenty, four or 8% of revenue compared to 10% in Q1 'twenty three.

Speaker Change: Net income was $31 7 million in Q1 24 up from $7 2 million in Q1 'twenty three.

Speaker Change: Diluted net income per share was <unk> 61 cents in Q1 24 based on 52 million fully diluted shares outstanding.

Speaker Change: Total employee head count was 1987, an increase of 132 employees since Q4 'twenty three.

Eliran Glazer: We expect to ramp throughout FY24 with continued focus on our R&D, product, and sales teams as we build out our platform and product suite. Moving on to the balance sheet and cash flow. We ended the quarter with $1.22 billion in cash and cash equivalents, up from $1.12 billion at the end of Q4-23. In Q1-24, free cash flow was a record of $89.9 million, and free cash flow margin, defined as free cash flow as a percentage of revenue, was 41%. Free cash flow is defined as net cash from operating activities, less cash used for property and equipment, and capitalized software costs, excluding non-recurring items.

Speaker Change: We expect to ramp throughout fiscal year 'twenty four with continued focus on our R&D product and sales teams as we build out our platform and product suite moving onto the balance sheet and cash flow. We ended the quarter with one point 22 billion in cash and cash equivalents up from 1.12 billion at the end of Q4 'twenty three.

Speaker Change: In Q1, 'twenty four free cash flow was a record of $89 9 million and free cash flow margin is defined as free cash flow as a percentage of revenue was 41%.

Speaker Change: 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.

Operator: Now, let's turn to our updated outlook for fiscal year 2024. For the second quarter of fiscal year 2024, we expect our revenue to be in the range of $226 million to $230 million, representing growth of 29% to 31% year-over-year. We expect non-GAAP operating income of $17 million to $21 million and an operating margin of 8% to 9%. We expect free cash flow of $47 million to $51 million and a free cash flow margin of 21% to 22%.

Speaker Change: Now, let's turn to our updated outlook for fiscal year 'twenty 'twenty four.

Speaker Change: For the second quarter of fiscal year 'twenty 'twenty four we expect our revenue to be in the range of 226 million to 230 million representing growth of 29% to 31% year over year. We expect non-GAAP operating income of 17 million to 21 million and an operating margin of 8% to 9% we expect.

Speaker Change: This rule of 47 million to 51 million and free cash flow margin of 21% to 22% for.

Operator: For the full year 2024, we expect revenue to be in the range of $942 million to $948 million, representing growth of 29% to 30% year-over-year. We expect full-year non-GAAP operating income of $77 million to $83 million and an operating margin of 8% to 9%. We expect full-year free cash flow of $238 million to $244 million and a free cash flow margin of 25% to 26%. I'll now turn it over to the operator for your questions.

Speaker Change: For the full year 'twenty 'twenty four we expect revenue to be in the range of 942 million to 948 million representing growth of 29% to 30% year over year, we expect full year non-GAAP operating income of 77 million to 83 million and an operating margin of 8% to 9%.

We expect full year free cash flow of 238 million to 244 million and free cash flow margin of 25% to 26% and now turn it over to the operator for your questions.

Operator: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you are called upon to ask your question and are listening via the loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, press star 1 to join the Q&A. Your first question comes from the line of Pinjalim Bora with J.P. Morgan. Please go ahead.

Speaker Change: We will now begin the question and answer session. If you have dialed in I would like to ask a question. Please press star one telephone keypad to rates or having joined the queue. If you would like to withdraw your question Press Star one again.

Speaker Change: So I called upon to ask that question in our listening via loudspeakers Tobias.

Speaker Change: Please pick up your handset and ensure that you're following its now looking at when asking a question again crestar wanted to join the queue.

Speaker Change: Your first question comes from the line of paint gallon Lora with Jpmorgan. Please go ahead.

Pinjalim Bora: Oh, great. Hey, thanks for taking the questions. Congratulations on a pretty solid quarter here. I want to ask you about the CRM and Dev side; the traction there is palpable. Seems like you're adding more CRM and Dev accounts in Q1, more than you did in Q4 or even a year ago. That's been a very tough SMB environment. Help us understand what is driving that. Are people kind of consolidating on Monday for these functional use cases, saving them money overall? Are these accounts largely new accounts, or are you seeing existing accounts in CRM and Dev? And how should we think about the contribution for these products?

Oh, great Hey, thanks for taking the questions congrats on a pretty solid quarter here.

Speaker Change: I wanted to ask you on the CRM and Dev side.

Speaker Change: Traction there is palpable it seems like you're adding more CRM and Dev account in Q1.

Speaker Change: More than that of Q4, or even a year ago Adapalene at Cerritos SMB environment help us understand what is driving that.

Speaker Change: People kind of consolidating on Monday for the functional use cases saving them money overall.

Speaker Change: These accounts new accounts, largely or are you seeing existing accounts at CRM in Dev and how should we think about the contribution for these products for this year.

Eran Zinman: Hi Pinjalim. This is Eran.

Ron: <unk> this is Ron so yeah.

Ron: Yes, we see great traction both for our CRM product and that product.

Eran Zinman: So, yeah, we see great traction, both for our CRM product and DEF product. I think it's a combination of, you know, traditionally Q1 is a strong quarter for us in terms of customer acquisition. So, I think that drove some of the increase in terms of net new customers. In addition to that, the products are open to all customers. So, we've seen more cross-sell from existing customers, and I would say that in both of Monday DEF and Monday CRM, we're also acquiring larger and larger customers over time.

Speaker Change: I think it's a combination of.

Speaker Change: Traditionally Q1 is a strong quarter for us in terms of customer acquisition.

Speaker Change: That drove some of the increase in terms of net new customers.

Speaker Change: In addition to that the product they are open to all customers. So we've seen more cross sell from existing customers and I would say that in both of our Monday Dev and monthly CRM.

Speaker Change: Also climbing and acquiring larger and larger customers over time, so obviously a lot of smbs and we see still a strong demand from smbs across all products, but also adding more features and functionality and over time, we'll be able to bring larger and larger customers to use those products. So I think its combination of multiple factors, but overall, we're very happy.

Eran Zinman: So, obviously, a lot of SMBs, and we still see strong demand from SMBs across all products, but we're also adding more features and functionality. And over time, we'll be able to bring larger and larger customers to use those products. So, I think it's a combination of multiple factors, but overall, we're very happy with the progress with both of those products and the traction we see from our customers.

Speaker Change: With the progress.

Speaker Change: Both of those products and the traction we see from our customers.

Eliran Glazer: Understood. One question for Eliran. Sorry. What do you think about that? Yes, sure. Thank you, Pinjalim.

Speaker Change: Yes understood one question for Al Iran.

Speaker Change: Alright.

Speaker Change: How do you think something.

Speaker Change: Yes sure.

Speaker Change: Pendulum.

Eliran Glazer: Okay. Here's another question for Eliran. Eliran, you took out the pricing assumption. Trying to understand from the new customers, did you see any kind of benefit from pricing in Q1? And I'm trying to understand the NBR commentary. I think last time you said that the NBR would uptick in the second half. Now it seems like you're talking about more of a small uptick at the end of the year, but pricing seems like it's doing well. So I'm trying to understand if, and how you're taking the overall guidance up and flowing through the beat for Q1. So I'm trying to understand the NBR commentary versus kind of the pricing benefits here.

Speaker Change: Okay and then another question for you all around.

Speaker Change: You took up the pricing assumption trying to trying to understand from the new customers did you see any kind of a benefit.

Speaker Change: From pricing in Q1, and I'm trying to understand the MBR commentary I think last time, you said that the MBR will uptick in the second half now it seems like Youre talking about more of a small uptick in at the end of the year, but.

Speaker Change: But pricing.

Speaker Change: It seems like <unk> is doing well I'm trying to understand if youre thinking that overall guidance up.

Speaker Change: And flowing through the beat for Q1, so I'm trying to understand the endear commentary versus kind of the the <unk>.

Speaker Change: Pricing benefits you're seeing.

Eliran Glazer: Hey Pinjalim, sure. It's Eliran.

Speaker Change: Hey, pendulum sure it'll Alonso.

Speaker Change: Just maybe to mentioned that the majority of the MBR improvement for fiscal year 'twenty four is related to pricing and because we initiated the new pricing in February it was mostly for the monthly ones.

Eliran Glazer: So just maybe to mention that the majority of the NDR improvement for fiscal year 24 is related to pricing. And because we initiated the new pricing in February, it was mostly the monthly ones that actually benefitted from the price increase. And the rest of the annual contracts are going to be throughout 2024. So we believe that it is still yet to be seen what the impact will be as these customers continue to renew their annual subscribers. So that is why we kind of took an approach with regard to the NDR. Potentially, the uptick is going to be later this year.

Alonso: That actually benefit from the price increase and the rest of the annual contracts are going to be throughout the way.

Alonso: Throughout 2024, so we believe that still yet to be seen what would be the impact as these customers continue to renew Daniel subscribers. So that is why we kind of took an approach with regard to the onvia.

Alonso: Potentially the uptick is going to be later this year.

Operator: Your next question comes from the line of Brent Bracelin with Piper Sandler. Please go ahead.

Speaker Change: Your next question comes from the line of Brent <unk> with Piper Sandler. Please go ahead.

Brent Alan Bracelin: Thank you. Good morning here.

Alonso: Yes.

Speaker Change: Thank you.

Brent Alan Bracelin: Here I wanted to start out with the improvement you saw in gross retention.

Unknown Executive: I wanted to start out with the improvement you saw in gross retention. Despite a pretty challenging macro here and some of the pricing updates, what's driving the improvement in retention given some of the challenges that you typically expect here? Is it just tied to some of these workflows that you're embedded in that people are seeing good value out of? Walk me through the improvement in retention that you're seeing and what's driving that thing.

Despite a pretty challenging macro here and some of the pricing updates.

Speaker Change: What's driving the improvement in retention given some challenges that you would typically expect here is it just tied to some of these workflows that you embedded that people are seeing good value out of walk me through the improvement in retention that you're seeing and what's driving that thanks.

Unknown Executive: So there are a few reasons for the improvement. One is that we continue to go up market with larger accounts and larger customers, so this is a more stable kind of customer with a better profile. The second thing I would assume is that the price increase that we did, potentially, the customers that used to be the ones that did not decide if they would like to continue to be customers of Monday probably churned, and we remained with, again, better customers on the platform.

Brian: Sure Brian it'll it on so there are a few reasons for the improvement one is we continue to go up market.

Speaker Change: With larger accounts to larger customers. So this is a more stabilized kind of customers with a better profile. The second thing I would assume that the price increase that we did.

Speaker Change: Potentially the customers that used to be the ones that did not decide they would like to continue to be customers of Monday, probably churned and we remained with again a better customers on the platforms on the platform. The third thing is what they want to mentioned earlier I believe that the new products that were launched with that we launched CRM Deb.

Unknown Executive: The third thing is what Eran mentioned earlier. I believe that the new products that we launched, CRM, and Dev, are now continuing to gain traction within our existing customer base, and therefore they contribute to the fact that we are more stable with our customers.

Speaker Change: I will now continue to gain traction within existing customer base.

Speaker Change: Therefore, they contribute to the fact that we are more stabilized.

Speaker Change: Our customers. So I think all of the above is actually creating a better profile of the retention.

Speaker Change: On Monday platform.

Unknown Executive: helpful color, and then my quick follow-up here is around linearity just given the macro uncertainty, what was the linearity you saw in kind of the quarter? It sounds like q2 is off to a pretty healthy start, so any color on month to month linearity surprised either way

Speaker Change: Helpful Color and then my quick follow up here is around linearity.

Just given the macro uncertainty what was the linearity you saw in the quarter. It sounds like Q2 is off to a pretty healthy start to so any color on month to month linearity that surprised either way.

Eliran Glazer: Sure. So I think I have a few comments. We believe that the current macro economy will remain choppy by the end of the year. You know, it doesn't mean that it's going to get any better, but it doesn't mean that it's going to get any worse. I think that we, you know, post our Q1 successful pricing adjustment, we have more confidence in the, you know, the results that we presented when we did the investor day back in December, the best case scenario.

Speaker Change: Sure. So I think fewer few comments, we believe that the current macro economy.

Speaker Change: We remain choppy.

Speaker Change: By the end of the year.

Speaker Change: It's not it doesn't mean that it's going to get any better but it doesn't mean that he is going to get any worse I think that we.

Speaker Change: First our Q1 successful pricing adjustment, we have more confidence on the on the results that we presented when we did the Investor day back in December the base case scenario. So all in all in terms of linearity we see.

Eliran Glazer: So all in all, in terms of linearity, we see positive momentum throughout the year. Also, you know, impacted by a strong performance and the price increase in Q1. Yet to be seen how it's going to be with the annual subscribers, but overall, positive momentum throughout the year. And this is why we increased guidance and improved margins.

Speaker Change: A positive momentum.

Speaker Change: Throughout the year also.

Speaker Change: Impacted by our strong performance and the price increase in Q1.

Speaker Change: You know yet to be seen how it's going to be with the annual subscribers, but overall positive momentum throughout the year and this is why we increased guidance and the improved margins.

Operator: Your next question comes from the line of Jackson Ader with KeyBank Capital Markets. Please go ahead.

Speaker Change: Your next question comes from the line of Jackson Ader with Keybanc capital markets. Please go ahead.

Jackson Edmund Ader: Great. Thanks for taking our questions, guys. The first one is maybe customer acquisition costs, so non-GAAP sales and marketing, ticked down in terms of the growth rate relative to the last couple of quarters. So just curious what you're seeing in the performance marketing channel from some of your competitors either up or down market.

Speaker Change: Great.

Speaker Change: Thanks for taking my questions guys.

The first one is maybe on customer acquisition costs.

Speaker Change: non-GAAP sales and marketing.

Speaker Change: Ticked down in terms of the growth rate relative to last couple of quarters. So just curious what youre seeing in the performance marketing channel from some of your competitors either up or down market.

Roy Mann: Hey, hi, it's Roy, so what we see in performance marketing, I think the most, the biggest influence in Q1 is that we always boost marketing spending Q1, it's like something we've done over the years and Q1 here wasn't different, but also we do see more competition in some areas, some have pulled in, then pulled back, and so I think it made us like stay within the same boundaries we feel comfortable with, we didn't, you know, chase them or downgrade it, but so there is slightly more competition this quarter than before.

Speaker Change: Hey, hi, its ROI and so.

Speaker Change: What we see.

Speaker Change: And performance marketing I think the most the biggest influence in Q1 is that we always.

Speaker Change: Most marketing spend in Q1, it's like something we've done over the years and Q1 here was different but also we do see.

Speaker Change: More.

Speaker Change: Competition in some areas some of poorly and then pulled back and so I think it made us like.

Speaker Change: Stay within the same boundaries, we feel comfortable with we didn't.

Speaker Change: Chase them more downgraded but.

Speaker Change: So there is slightly more competition this quarter than before.

Eran Zinman: Okay. All right. Great. That makes sense. And then I'm curious about the DRM and the DevTool. Does one of them end up lending itself to better cross-sell or upsell with work management than the other?

Speaker Change: Okay, alright, great that makes sense.

Speaker Change: I'm curious on.

Speaker Change: The CRM and the Dev tools.

Speaker Change: One of them.

Speaker Change: And up lending itself to.

Speaker Change: Better cross sell or up sell what's worked management than the other.

Eran Zinman: Yeah, yeah, I can take it, Ajax and Saran. So, we didn't see any, you know, one of those tools perform better compared to the other one. Both in terms of CRM and dev, we see good traction and customers adding more products over time. The same goes for work management itself. We see customers starting to use CRM and dev, let's say, roughly in the same ratio. So we don't see any significant change. I will say that we're very encouraged by the fact that customers are trying more products over time.

Speaker Change: Yes, yes, I can take it.

Speaker Change: And so on so.

Speaker Change: What do you see any one of those tools performed better compared to the other one.

Speaker Change: Both in terms of the CRM and Dev, we see good traction in Custer.

Speaker Change: Customers, adding more products over time.

Speaker Change: Same goes for <unk> itself, we see customers starting to use CRM and Dev, let's say roughly the same ratio so.

Speaker Change: So we don't see any significant change I will say that we're very encouraged from the affect customers have tried more products over time.

Eran Zinman: And again, now the products are out to the entire population, and we have more opportunity to do cross-selling. And over time, we hope that we'll be able to land bigger and bigger deals on both of those products, like we've done with work management in the past. Hey, I can add.

Speaker Change: Again, now that the product rollout to the entire population.

Speaker Change: We have more opportunity to do cross sell and over time, we hope that we will be able to land bigger and bigger deals in both of those products like we've done with wealth management in the past.

Eran Zinman: Hey, I can add to that that we do see a different behavior within larger, smaller customers, whereas smaller customers tend to adopt other products more quickly, and larger ones, you know, require more time or effort.

Speaker Change: Hey, I can add that.

We do see a different behavior within larger smaller customers, whereas smaller customers tend to adopt more quickly.

Speaker Change: <unk> products and larger ones.

Speaker Change: Acquirers like more time more effort.

Operator: Your next question comes from the line of Arjun Bhatia with William Blair. Please go ahead.

Speaker Change: Your next question comes from the line of Biogen <unk> with William Blair. Please go ahead.

Arjun Rohit Bhatia: Perfect. Thank you, guys.

Speaker Change: Perfect. Thank you guys and nice job here.

Speaker Change: Strong start to the year.

Speaker Change: Maybe if I can start with.

Speaker Change: Just the competitive environment, certainly you had really strong Q1 results. It seems like pricing is contributing to that but core demand also seemed strong and.

Speaker Change: What we're hearing from other software vendors is that the SMB market is certainly a little bit choppy.

Eliran Glazer: Nice job here on a strong start to the year. Maybe I can start with just the competitive environment. Certainly, you had really strong Q1 results. It seems like pricing is contributing to that, but core demand also seems strong. And what we're hearing from other software vendors is that the SMB market is certainly a little bit choppy. I'm curious how you think of the shift in competitive dynamics in the industry. I think you've been taking share over the last several quarters, but when you look out at your competitors, how has behavior changed? Are customers consolidating more? Talk us through some of the trends that you're seeing that's enabling growth here.

Speaker Change: I'm curious, how you're thinking of the shift in competitive dynamics in the industry I think.

<unk> been taking share over the last several quarters, but.

Speaker Change: When you when you look out at your competitors, how is behavior change our customers consolidating more talk us through some of the trends that youre seeing thats, enabling the growth here.

Roy Mann: Sure, hi Arjun, it's Eliran. So maybe I will start with the S&Bs. As you know, since we reported Monday, S&B continues to be a very strong segment. It's around 45% of our total ARR. And we continue to invest significantly in performance marketing, always in Q1 alongside mid-market and enterprise to maintain this. In addition, I think that what we mentioned earlier, the new product, is responding well with S&B customers, both CRM and DEV, together with the features and functionalities that we are introducing to the market.

Speaker Change: Yes, sure IR June it'll Iran. So maybe I will start with the Smbs.

Speaker Change: You know things.

Speaker Change: We reported Monday SMB continued to be very strong segment.

It's around 45% of our total alcohol.

Speaker Change: And we continue to invest significantly in performance marketing marketing always in Q1, alongside mid market and enterprise to maintain these in addition, I think that what we mentioned earlier with the new products are resonating well with SMB customers, both CRM and data together with the features and functionality.

Roy Mann: Also, we were encouraged by the fact that when we did the pricing adjustment, we didn't see a reaction that was overstated but actually better than what we anticipated. So it's also kind of like we gained confidence in the S&B segment. And one thing that, you know, our peers are, you mentioned, in terms of competition, our peers mentioned in the past that they were focusing more on S&B, sorry, on upmarket enterprise accounts.

Speaker Change: We are introducing to the market. Although we were encouraged by the fact that when we did the pricing adjustment we didn't see a reaction that was overstated, but that's certainly better than what we anticipated. So it's also kind of regain confidence in the SMB segment and one thing that periods are you.

Speaker Change: Mentioned in terms of competition I will appear as mentioned in the past they are focusing more on SME.

Roy Mann: And I think that this allows us to focus even more on S&Bs and gain market share. So, all in all, in terms of competition, I feel we are in a very good place with regard to S&Bs. And we have no major concerns, you know, versus the other periods.

Speaker Change: Upmarket enterprise accounts, and I think which allows us to focus even more on smbs and gain market share. So all in all in terms of competition I feel.

Speaker Change: We are in a very good place with regards to Smbs and.

Speaker Change: And we have no major no major concerns.

Speaker Change: Versus the other periods.

Operator: Perfect. Very helpful. Thanks, Eran.

Speaker Change: Perfect.

Speaker Change: Very helpful. Thanks, All right and then.

Speaker Change: The other one.

Speaker Change: You launched several new kind of AI capabilities.

Speaker Change: This quarter.

Speaker Change: I read about some of them in the shareholder letter, but when you think about the impact I know, it's still early but the impact that AI is having in your customer base Im curious, how youre seeing adoption and the usage of those.

Speaker Change: <unk>.

Speaker Change: Right or wrong, when you think out longer term.

Speaker Change: How much.

Kat Ryan: And then the other one, you know, you launched several new kinds of AI capabilities this quarter. I read about some of them in the shareholder letter. But when you think about the impact, I know it's still early, but the impact that AI is having on your customer base, I'm curious how you're seeing adoption and usage of those capabilities. And then, Roy or Eran, when you think out longer term, how much do you think these new capabilities are going to make it easier for users and customers to build on top of Monday? And what do you think that will do from just user adoption as you think out over the next year or two here?

Speaker Change: Do you think these new capabilities are going to make it easier for users and customers to build on top of Monday, and what do you think that does from just the user adoption.

I think out over the next day year or two here.

Eran Zinman: Hi, it's Roy. So, we just rolled out the initial phase of our AI building blocks, like we talked about yesterday, and we see great initial results from that because people actually use it to build new workflows. And, you know, they really harness the power of AI to do a lot of stuff they would normally do themselves. And regarding your questions about platform adoption, I think AI plays two parts. One is giving people, our customers, more capabilities and making them stickier and, you know, increasing automation and a lot of things they can now do with the platform, but also adopt the platform itself and do a lot of, like, let's say, harder tasks for them, like creating formulas, like building boards, connecting things, and also suggesting things they might do.

Roy: Hi, it's Roy so.

Roy: We just rolled out.

Roy: The initial phase of our building blocks like we talked about in Investor day, and we see great initial results from that because people actually use it to build new workflows and now theyre really harnessed the power of AI.

Roy: To do a lot of stuff they would normally do themselves.

Roy: Regarding to your question is about platform adoption I think.

Roy: Like AI plays two parts, one is giving people are customers more capabilities, and making them stickier and increasing automation and a lot of things. They can now do with the platform.

Roy: But also adopt the platform itself and do a lot of like let's say.

Roy: Harder tasks for them like creating formula is like building boards connecting things and also suggesting things they might do so that's like another.

Eran Zinman: So, that's like another direction we're always pushing towards. So, yes, on both. And in the next year or so, we expect the adoption to increase dramatically and that our customer base will adopt all those capabilities.

Roy: The direction were always pushing towards so yes on both.

Roy: And the next year or so and we expect the adoption to increase their dramatically and that are.

Roy: Customer base will adopt all those capabilities.

Roy: Okay.

Eliran Glazer: Your next question comes from the line of Kat Ryan with Goldman Sachs. Please go ahead.

Speaker Change: Your next question comes from the line of Patrick <unk> with Goldman Sachs. Please go ahead.

Operator: Hello, thank you very much, Roy, Eran, and Eliran. Congratulations on the quarter. Very few companies have been able to put up the kind of numbers that you have in this Q1. So really, kudos to you guys.

Speaker Change: Hello, Thank you very much.

Patrick <unk>: Ron Congratulations on the quarter very few companies have been able to put up the kind of numbers that you that you have in this Q1, so really kudos to you guys. My question is in regards to the move upmarket to the enterprise.

Speaker Change: Very rare disease companies more effectively.

Speaker Change: Effectively it rapidly upmarket and maintained at the minute. So when I look at your 50 plus customers tend to take those customers.

Speaker Change: The net new add our growth is phenomenal revenue growth there is phenomenal while they still continue to maintain that pace in the lower end of the market. So question is what are the what are the products that are being taken up by the larger enterprise customers.

David E. Hynes: My question is, in regards to the move up market or the enterprise, I mean, it's very rare to see companies move this effectively and rapidly up market and maintain their performance. So when I look at your 50k plus customers, 100k plus customers, the net new ad art growth is phenomenal. The revenue growth there is phenomenal, while you still continue to maintain your pace in the lower end of the market. So the question is, what are the products that are being taken up by the larger enterprise customers? Are there deployment differences in what they're consuming and the potential?

Speaker Change: Are their deployment differences in what they're consuming and.

Speaker Change: Tension.

Eran Zinman: For more revenue within the installed base, because it just looks like it's just getting started in the upmarket motion, 50K, 100K, any changes you're making to go more deliberately and become a bigger player in that market. Also, one for Eliran: sorry, your net expansion rates in the 50 plus K cohort look very solid. As your business really tilts more and more towards the 50K plus cohort, shouldn't this be an encouraging sign for overall net expansion rates, improving for the company in the quarters ahead? Thank you so much.

Speaker Change: More revenue within that installed base because it just looks like it's just getting started in the upmarket motion show PK.

The changes youre, making to go more deliberately and.

Speaker Change: When you think about prepared that market also answer sorry.

Speaker Change: Transient pace into 50, plus K cohort looks very solid as your business really tilt more and more towards that particular cohort.

Speaker Change: Would this be an encouraging sign for overall net expansion rates improving for the company in the quarters ahead. Thank you so much.

Eliran Glazer: Yeah, hi Kash. This is Eran.

Speaker Change: Yes.

Ron: This is Ron so.

Look I think.

Speaker Change: In terms of CRM and Dev, it's mostly mostly SMB is now and.

Speaker Change: I think with work management, we really were able to.

Speaker Change: It's a huge challenge as greater product that.

Speaker Change: Is suitable for Smbs, but also can scale.

Speaker Change: For the enterprise customers and we managed to do that it was a very focused effort from our side and.

Eran Zinman: So, look, I think in terms of CRM and dev, it's mostly SMBs now. And I think with work management, we really were able to, and it was a huge challenge to create a product that is suitable for SMBs but also can scale for enterprise customers. And we managed to do that.

Speaker Change: Very important for us.

Eran Zinman: It was very focused effort from our side and very important for us. And we actually, this is how we built the company. So, we can hear the voice and the feedback from both the SMBs and the larger enterprises. And we're going to do and apply the same secret sauce to our CRM and dev products because we understand how important it is, not just to scale up the market, but also to keep that traction of our SMB customers.

Speaker Change: We actually this is how we build the company. So we can hear the voice and the feedback from both Smbs and large enterprises, and we're going to do and they apply the same secret sauce to our CRM and debt products.

Speaker Change: Because we understand how important it is not just to scale up market, but also to keep that traction of our SMB customers such.

Speaker Change: Such a important funnel for us so.

Eran Zinman: It's such an important funnel for us. So, basically, this is how we think about this new product, and we're applying the same methodology that we've done to work management. And overall, having that product suite really helps scale into the enterprise because they can use multiple products and deploy multiple products at the same time, which really contributes towards our NDR in the larger customers. So that's how we see it in terms of the multiproduct.

Speaker Change: So basically this is how we're thinking about this new product and we are applying the same methodology that we've gone to work management.

Speaker Change: And overall, adding that product suites really helps also scale into the enterprise because they can use multiple products.

Speaker Change: And deploy move request at the same time, which will contribute towards our MBR in the larger customers.

Speaker Change: So that's how we see it in terms of the multi product.

Eliran Glazer: And maybe I will follow up on Eran, Kash, hi, to your next question. So maybe just to add, we continue to invest in the platform itself and add more capabilities in order to support the scale of enterprise customers. Just as a reminder, MondayDB is going to continue to develop and evolve again to help us scale with larger customers. We're adding additional features and functionalities like add-ons, all kinds of functionalities that will be more suitable for the enterprise customers that some of our peers already have.

Speaker Change: And maybe I will follow up on that on the cash to high to your next question. So maybe just to add we continue to invest in the platform itself and add more capabilities in order to support the scale of.

Speaker Change: All of the enterprise customers just as a reminder.

Speaker Change: Monday DB is going to continue to develop and evolve again to help us scale with larger customers.

Speaker Change: Adding additional features and functionality like add ons, all all kind of functionalities that will be more suitable for the enterprise customers.

Speaker Change: Some of our peers already have so this is an area of investment now to your question.

Eliran Glazer: So this is an area of investment. Now to your question: we continue to go upmarket and what it means to us. So I think for us, Kash, we are consistent with the fact that we are saying, look, we are servicing all of the segments. We care about SMBs. We care about the mid-markets because we think there is a huge opportunity there. But we also want to make sure that we go upmarket because this is more of a retention and stickiness and larger and larger deals. I think this is something that we would also like to see in the next few quarters.

Speaker Change: We continue to go up market and what it means to us So I think for us the cash we are consistent with the fact that we're saying look we are servicing all of the segments. We care about the Smbs, we care about the mid market. Because we think there is a huge opportunity there, but we also want to make sure that we go up market because this is a more.

Speaker Change: In terms of retention and stickiness and larger and larger deals I think this is something that we would like also to see coming.

Speaker Change: In the next few quarters and I think this year with the price increase and everything that we're introducing to the market.

Eliran Glazer: And I think this year, with the price increase and everything that we are introducing to the market, by the end of the year, after we roll out most of the price increase and see what the reaction of bigger and larger customers will be, we will have more confidence and have better visibility for future years. But this is a journey. So currently, the direction looks very good. But again, we have to see how we progress throughout the year. Congratulations!

Speaker Change: By the end of the year after we roll out most of the price increase and to see what will be the reaction of the bigger and larger customers.

Speaker Change: We will have more confident on and have better visibility on the future years, but this is a journey.

Speaker Change: So the currently the direction looks very good but again, we have to see how it progressed throughout the year.

Operator: Congratulations on the growth and free cash flow margins. That's phenomenal. Thank you so much, guys.

Speaker Change: Congrats on growth and free cash flow margins. That's phenomenal. Thank you so much guys.

Speaker Change: Thank you.

Derek Wood: Your next question comes from the line of D. J. Hynes with Canaccord Genuity. Please go ahead.

Speaker Change: Your next question comes from the lineup DJ Hynes with Canaccord Genuity. Please go ahead.

Eran Zinman: Hey, guys. I'll echo everyone else's sentiments. Congratulations. It's a great quarter. Eran, maybe I can start with you just in terms of progress with the development of the service product offering. Are things on track there? And, I guess broadly, anything you're seeing in the base in terms of usage patterns or any other observations that make you more or less, you know, confident in the direction of product development?

David E. Hynes: Hey, guys I'll echo everyone else's sentiments, congrats on a great quarter.

David E. Hynes: Hey, Ron maybe I can start with you just in terms of progress with the development of the service product offering.

Speaker Change: <unk> is on track there and I guess broadly anything youre seeing in the base in terms of usage patterns or any other observations I'd make two more or less.

Confident in the direction of product development.

Eran Zinman: Yeah. Hi DJ. This is Eran.

Ron: Yes, Hi D. J this is around so.

Speaker Change: We're very excited familiar to service we're going to.

Eran Zinman: So yeah, we're very excited for the Melody service. We're going to launch it towards the end of the year, end of 2024. We already have an alpha version.

Speaker Change: Launches towards the end of the year end of 2024.

Speaker Change: We already have.

Speaker Change: Offer version.

Speaker Change: We are talking with a few customers that are now trying to product than overall like the reaction is very positive I can also mentioned I think we mentioned this briefly in the Investor day, but.

Eran Zinman: We are talking with a few customers that are now trying the product, and overall, the reaction is very positive. I can also mention, I think we mentioned this briefly in the in-verse today, but there's a lot of demand from our customer base for the Monday service, a lot of excitement. And I can share that the initial feedback from customers is very encouraging. So I'm really excited for this, but obviously, it's a new product.

Speaker Change: Does that demand from our customer base towards Monday service, a lot of excitement and I can share that the initial feedback from customers is very.

Speaker Change: Very encouraging.

Speaker Change: So really excited for this but.

Speaker Change: It's a new product is going to take time to gain traction and momentum.

Eran Zinman: It's going to take time to gain traction and momentum, but like I said, we're very excited for the release of that. And I think that's another step towards our vision of managing the core of work. I feel that service, whether it's IT or HR requests or any other form of in-company ticketing system, is such an important part of that vision. So that's why we're very excited for that product release.

Speaker Change: Like I said, we're very excited for the release of that and I think thats.

Speaker Change: Step towards our vision of managing the core of work I feel that.

Speaker Change: Service, whether it's IP or HR request or any other form of <unk>.

Speaker Change: <unk> company ticketing system is such an important part of that vision. So.

Speaker Change: So that's why we're very excited for that product.

Eliran Glazer: Yeah, that makes sense. And then, Eliran, I have a follow-up for you. I think last quarter you told us 20% of the base is monthly, and 80% is annual. That 80%, where the price increases are kind of coming on a rolling basis, is there anything we should think about in terms of the linearity of the renewal pool, just in terms of tactically kind of where those price increases might impact the model as we look over the next four quarters?

Speaker Change: Yeah makes sense and then on.

Speaker Change #100: A follow up for you I think last quarter, you told us 20.

Speaker Change #101: 20% of the basis monthly, 80% and annual that 80%, where the price increase is kind of coming on a rolling basis is there anything we should think about in terms of linearity of the renewal pool, just in terms of tactically kind of where those price increases might impact the model as we look over the next four quarters.

Eliran Glazer: Hey EJ, it's a great question actually. Yes, so we believe we're going to complete the rollout of the new pricing for annual subscribers by H1 of next year. So think about the next 12 months from now because, you know, we introduced it in late February; now they are getting into it, you know, upon renewal, we're going to see it, so probably the next 12 months to 15 months; this is when it's going to be completed.

Eliran Glazer: Hey, DJ, it's a great song.

T J: Hey, T J, it's a great question actually yes. So we believe we're going to complete the rollout of the new pricing for the annual subscribers by H. One of next year. So think about the next 12 months from now because we introduce it on late February now they are getting into.

T J: Upon renewal, we're going to face for probably the next 12 months.

T J: 215 months. This is when it is going to be completed.

Operator: Your next question comes from the line of Derek Wood with J.D. Cowan. Please go ahead.

Speaker Change #103: Your next question comes from the lineup Derrick Wood with Cowen. Please go ahead.

Brent John Thill: Great, thanks and congrats on a good quarter guys. The last quarter you guys talked about softness in late December and into January with less seed expansion and still some seed downgrades happening. Sounded like things got better through the quarter. Can you just comment on what you saw improve in February and March and, I guess, since you're halfway through Q2 now, how demand trends have tracked quarter to date so far?

Great. Thanks.

Speaker Change #104: Congrats on a good quarter guys.

Speaker Change #105: Last quarter, you guys talked about softness in late December and into January with.

Speaker Change #106: Last seat expansion and still some seat downgrades happening.

Speaker Change #107: Like things got better through the quarter can you just comment on.

Speaker Change #107: What you saw improve in February and March and I guess since you are halfway through Q2 now.

Speaker Change #107: Demand trends of track quarter to date, so far.

Eran Zinman: Yeah, Derek, I can start. This is Eran, and if he wants to follow up, So, yeah, in the previous quarter, we were just starting the year, and we were kind of rolling out the price increase, and I think there was a lot of uncertainty about the effect of that. As we mentioned in the previous earnings call, it was the first time we ever raised prices for our customer base. I think what changed is two things.

Speaker Change #107: Yes, Eric I can start this is Ron.

Speaker Change #108: If anyone wants to follow up so yeah I think.

Speaker Change #108: Previous quarter, where you're just we're starting the year.

Can I in rolling out the price increase and I think there was a lot of uncertainty about the effect of that like we mentioned in the previous earnings call. It was the first time, we ever raised prices for our base cost of our customer base.

Eran Zinman: One, we thought that the price increase was the reception for that from a clean customer base was very positive. We were even encouraged by the feedback. And overall, we saw a lower churn profile, fewer downgrades than we expected, and great feedback from customers. So, I think that was very encouraging. In addition to that, we saw great demand from all segments, including SMB and Q1, and overall strong momentum in the business. And I think that's what led us to be more optimistic towards the end of the year and to see great momentum build throughout the year. I think that has been fundamentally changed.

Speaker Change #108: I think what changes do things one we thought that the price increase was with the reception for that.

Speaker Change #108: <unk> customer base was very positive we were even encouraged by.

Speaker Change #109: By the feedback.

Speaker Change #110: And overall, we saw lower churn profile less downgrades than we expected and great feedback from customers. So I think that was very encouraging and in addition to that we saw great demand from all segments, including SMB in Q1.

Speaker Change #110: And overall strong momentum in the business and I think thats, what that has to be more optimistic towards the end of the year and seeing great momentum building throughout the year I think that was fundamentally changed.

Eliran Glazer: Maybe I would just add, this is Eliran, that the market is still inconsistent and choppy, but we feel like the momentum for us is relatively good and encouraged by what Eliran said for the rest of the year.

Speaker Change #111: Yes, maybe I will just add this is really around the market is still inconsistent and choppy.

Speaker Change #112: But we feel like the momentum for us is relatively good and encouraged by what <unk> said.

Speaker Change #112: To the rest of the year.

Eliran Glazer: Great. And maybe for Eliran, would you be able to quantify the benefit from price increases in the quarter and remind us, I guess you said $25 million tailwind this year. What was the previous assumption?

Speaker Change #112: Great.

Ron: And maybe for Ron.

Speaker Change #113: <unk> been able to quantify the benefit from price increases in the quarter and remind us.

Speaker Change #114: I guess, you said $25 million.

Speaker Change #115: Tailwind this year is that.

Speaker Change #116: What was the previous assumption.

Eliran Glazer: So, the previous assumption was between 50 to 20, just as a reminder, this is revenue, revenue is a derivative of the ARL, so if you take a very, you know, by and large, you get the ARL throughout the year and the revenue is recognized on a monthly basis, this is something we increase the numbers, we feel now this is the contribution of the price increase because much of the effect of the annual renewals is going to be either throughout the second part of the year or next year because of the fact that you get one divided by 12 of this contract when they are renewed, so we feel the $25 million is a pretty solid number.

Speaker Change #117: So the previous assumption was that between 50% to 20, just as a reminder, this is revenue revenue that derivative of data. So if you take a very binary.

Speaker Change #117: By and large.

Speaker Change #118: <unk> got the ALLL throughout the year and the revenue is recognized on a monthly basis. This is something we increased the numbers. We feel now this is the contribution of the price increase because much of the effect of the annual renewals is going to be either throughout the second part of the year or next year because of the fact that you get one divided by 12.

Speaker Change #118: Of this contract when they renew so we feel that $25 million is pretty quickly.

Speaker Change #118: Solid number.

Operator: Your next question comes from the line of Brent Thill with Jeffreys. Please go ahead.

Speaker Change #119: Your next question comes from the line of Brent Thill with Jefferies. Please go ahead.

George Michael Iwanyc: Thanks. It sounds like S&B is fine, so that was good to hear.

Speaker Change #118: Thanks.

Speaker Change #120: Sounds like SMB is fine so that was good to hear I guess when you think about the upper end of the mid market and large enterprise can you just expand on what Youre seeing I know you.

Speaker Change #121: Beginning to see some larger seat counts some bigger enterprise spend.

Speaker Change #121: Are these enhancements to the underlying platform, helping you scale up and when some of these larger and larger enterprise can you give us a sense of what's happening there.

Roy Mann: I guess when you think about the upper end of the mid-market and large enterprise, can you just expand on what you're seeing? I know you're beginning to see some larger seat counts, some bigger enterprise spend. Are these enhancements to the underlying platform helping you scale up, and when some of these larger enterprises, can you give us a sense of what's happening there?

Speaker Change #121: Yes, Hi, Brian This is Ron so yeah definitely in addition to the SMB segment, we continue to see good momentum with the large enterprises.

Eran Zinman: Yeah, hi, Brent. This is Eran. So yeah, definitely, in addition to the SMB segment, we continue to see good momentum with the larger enterprises. So obviously, we had that big deal that we announced two quarters ago, but we still see great deals built enough in the pipeline, and hopefully, they will convert into more such enterprise opportunities. But overall, the enterprise pipeline looks very healthy, and I am hoping for more big deals like that coming up in 2024.

Speaker Change #121: So we obviously, we had the big deal that we announced two quarters ago, but we still see great deals built enough in the pipeline and I hopefully will convert into more such enterprise opportunities.

Speaker Change #121: But overall the enterprise pipeline looks very healthy.

Speaker Change #121: Hoping for more big deals like that.

Speaker Change #121: <unk>.

Speaker Change #121: Coming up in 2024.

Eran Zinman: And when you think about the kind of infrastructure that you're putting in, whether it's going to market, you know, the platform scalability, what, just give us an example, what you're doing to get ready? I guess many have kind of cited, is this the same strategy that Salesforce saw when they started small, went mid, went large, and ultimately, large became bigger than small? Are you seeing something similar to their pathway? Or what's giving you confidence that you can make that move?

Speaker Change #121: And when you think about the kind of the infrastructure that you're putting in whether its go to market.

Speaker Change #121: Platform scalability.

Speaker Change #122: Give us an example, what youre doing to get ready.

Speaker Change #123: I guess many of us.

Is this the same strategy that salesforce solved when they start small with NIM went large ultimately large became bigger than small.

Speaker Change #124: Are you seeing something similar to their pathway there.

Speaker Change #125: What's giving you confidence that you can you can make that move.

Operator: Yeah, so again, I don't know the details of what Salesforce has done, but we've been working very hard on our infrastructure to support it. Obviously, we've talked about MondayDB, but this is going to be a flagship project for us as a company, and we continue to roll out minor versions, and we have some major versions coming up. Also, we make a lot of improvements to the platform, not just in terms of features and functionality but also in terms of security, governance, and permissions.

Speaker Change #126: Yes so.

Speaker Change #127: Again, I don't know the details of what Salesforce has done, but we've been working very hard on.

Speaker Change #127: Infrastructure to support it.

Speaker Change #127: Obviously, we've talked about Monday BB, but this continues to be a flagship.

<unk> for us as a company and we continue to rollout minor versions and we have some major version coming up also we make a lot of improvements to the platform.

Speaker Change #127: Not just in terms of features and functionality, but also in terms of security and governments and permission it's an ongoing.

Operator: It's an ongoing process for us, and we talk with customers consistently and keep improving the platform, and we also improve our go-to market and the way we navigate ourselves within an organization and reach decision makers. So all in all, if I could buy anything, everything I said, working on the infrastructure, working on the product, working on the go-to market, our sales team, and we're very optimistic in our ability to continue to scale in the enterprise segment. Your next question comes from the line by George Iwanyc with Oppenheimer. Please go ahead. Thank you for taking the time to read this.

Speaker Change #127: Worked for us and we talk with customers consistently and keep improving the platform and also we improve our go to market and the way, we navigate ourself within organization enriched and decision makers. So all in all if I could that anything everything I said working on the infrastructure working on the product working on the go to market our <unk>.

Speaker Change #128: Sales team.

Speaker Change #129: And we're very optimistic in our ability to continue and scale in the enterprise segment.

Scott Randolph Berg: Your next question comes from the line of George Iwanyc with Oppenheimer. Please go ahead.

Speaker Change #130: Your next question comes from the line of Jerry Giovanni with Oppenheimer. Please go ahead.

Jerry Giovanni: Thank you for taking my questions and congrats on the strong results.

Jerry Giovanni: Continued to steadily add to your channel and partner program can you give us some color on the impact that this is having on your deal pipeline.

Speaker Change #132: CRM and momentum.

Speaker Change #132: Momentum as well.

Roy Mann: Hey, this is Roy. So yeah, we're very proud of the partner channels we have. We have great partners, and we're continuing to add more. We feel more like we are working with the entire organization. With the partners, we're also focused on going upmarket and deepening what partners do with our customers, like more services, helping them scale, giving consultancy, and so on, essentially supporting us in regions we don't have sales in but also in the regions we do operate ourselves. And we see that as a great thing going forward as we invest more in. Maybe just to add to what Roy said, you know; we have a robust partner network.

Speaker Change #132: Okay.

Speaker Change #133: This is really so yes, we are.

Speaker Change #134: We're proud of the partner.

Speaker Change #134: The channels, we have we have great partners and we are continuing to add more.

Speaker Change #134: Or more like we are with the entire organization.

Speaker Change #134: With partners. We're also focused on going upmarket and deepening what partners do with our customers like more.

Speaker Change #135: Services, helping them scale, giving consultancy and so on.

Speaker Change #135: Essentially supporting us in regions, we don't have sales, but also in the regions, we do operate ourselves in.

Rich: And we see that as a great thing going forward, we invest more in maybe just to add to what rich said, we have a robust partner network now with over 180 channel partners with some of the top award size like Accenture Hitachi KPMG and we also have bill.

Unknown Executive: Maybe just to add to what Roy said, you know, we have a robust partner network now with over 180 channel partners, some of the top world SIs like Accenture, Hitachi, KPMG, and we're also building a lot of ISVs on our marketplace. So this is an area of investment that will continue to generate ARR and potential opportunities for us. And Eliran, maybe, can you give us some color on how the international markets are behaving on a relative basis? Sure, so George, for us, it's pretty stable.

Rich: And a lot of <unk> on oil.

Rich: Our market based so this is an area of investment.

Speaker Change #137: That will continue to generate.

Speaker Change #137: Yes.

Speaker Change #137: And potential opportunities for us.

Speaker Change #138: And maybe can you give us some color on how the international markets are behaving.

Speaker Change #138: A relative basis.

Speaker Change #139: Sure So Georgia for Us, it's pretty stable, if you think about our business.

Eliran Glazer: If you think about our business, around 50% is coming from North America. I believe 62% is coming from the US and Canada. We are seeing very strong momentum in Europe. And in places where we don't have sales organizations, we operate, to your prior question, with partners. The momentum is good and relatively stable in terms of international expansion.

Speaker Change #139: Around 50%.

Speaker Change #140: Is that coming from North America, I believe 52% coming from the U S and Canada, we are seeing very strong momentum in the in Europe and in places, where we don't have sales organizations we are.

Speaker Change #140: To your prior question with partners the momentum is good and relatively stable.

Speaker Change #140: Terms of <unk>.

Speaker Change #141: International expansion.

Speaker Change #141: Okay.

Speaker Change #141: Okay.

Operator: Your next question comes from the line of Michael Berg with Boss Fargo Securities. Please go ahead.

Speaker Change #142: Your next question comes from the line of Michael Berg with Wells Fargo Securities. Please go ahead.

Steven Enders: Hey, thanks for taking the question. Congratulations on your success in the quarter. I wanted to ask you what you feel is allowing you to see success in this Tropy macro, in particular with SMBs. Is there anything in particular about your product or approach to market, or even just like the increased breadth of the offering now, that's allowing you to see this incremental success relative to many of the other SMB software vendors in this market?

Speaker Change #143: Hey, Thanks for taking the question congrats on the success in the quarter I wanted to ask what your what you feel is.

Speaker Change #144: Allowing you to see success in this choppy macro in particular with Smbs is there anything in particular about your product or go to market or even just like the increased breadth of the offering now that's allowing you to see this incremental success relative to many of the other SMB software vendors in this market.

Roy Mann: Hi, it's Roy here. So we feel very strong with SMBs, as we saw that because Monday is a platform and you can do a lot of things with it, we see that they really rely on us in these times and kind of add more use cases and see the true value of the platform. And so that's why we keep seeing that they are very stable throughout, you know, this last period, while we're also very strong in acquiring new ones.

Speaker Change #144: Hi, it's Roy here, so we feel very strongly with smbs as we saw that because the Monday of the platform and you can do a lot of things that we see that they really rely on us in these times and kind of add more use cases and see the true value of the platform.

Speaker Change #144: And so that's why we keep seeing that they are very stable throughout.

Speaker Change #145: This last.

Speaker Change #145: <unk>, while were also very strong and acquiring new ones as already mentioned, we see like less competition in general because like other <unk>.

Roy Mann: As I mentioned, we see less competition in general because other players have chosen to go up market and are, you know, we're really pushing on performance marketing and really understanding how to reach those customers on a growing scale. So it's a very good market for us.

Speaker Change #145: Layers have chosen to go upmarket.

Speaker Change #146: And are you now.

Speaker Change #146: We're really pushing on the performance marketing and really understanding how to reach those customers.

Speaker Change #146: On growing scale. So it's a very good markets for us.

Eliran Glazer: Makes sense. And then one quick follow-up, free cash flow had a really nice performance in the quarter, and you raised that outlook fairly nicely for the rest of the year. Anything in particular driving the strength in free cash flow dynamics relative to where you were expecting at the beginning of the year? Yeah, sure.

Speaker Change #147: It makes sense and then one quick follow up free cash flow had a really nice performance in the quarter and you raised that outlook.

Speaker Change #147: Fairly nicely for the rest of the year.

Speaker Change #148: I think in particular driving the strength in free cash flow dynamics relative to where you were expecting at beginning of the year.

Eliran Glazer: Yeah, sure. So, Michael, in terms of the kind of variance between free cash flow and operating profit, I would say 50% is related to strong cash collection from the S&Bs, as we see strong top of funnel activity, the price uplift, as a reminder, it was mostly the monthly ones in February, and some upmarket contracts. Around 20% of this is related to interest income. Due to the healthy balance sheet that we have, and I would say around 30% is related to the normal timing of expenses.

Speaker Change #149: Yes sure.

Scott Randolph Berg: So Michael in terms of kind of the variance between free cash flow and operating profit. So I would say, 50% is related to strong cash collection from the Smbs as we see stronger top of funnel activity.

Scott Randolph Berg: Our fleet's uplift as a reminder, we do.

Speaker Change #151: It was mostly the monthly ones on February and some upmarket construct around 20% of this is related to interest income.

Speaker Change #151: Due to the healthy balance sheet.

Speaker Change #151: What we have and I would say around 30% is related to normal timing of expenses.

Eliran Glazer: Just as a reminder, we expect free cash flow margin to come down in Q2 due to seasonality as we pay, you know, bonuses. This is, you know, pricing. Sorry, salary increases are being paid in Q2, as well as the headcount that we hired in Q1, also going to be fully onboarded in Q2. But overall, we feel very comfortable with what we said to generate $1 billion of free cash flow over the period of 2023 to 2026 and striving to get the 25% annual free cash flow margin, as we said.

Speaker Change #151: Just as a reminder, we expect free cash flow margin to come down in Q2 due to seasonality as we pay.

Speaker Change #152: No bonuses.

Speaker Change #153: Pricing sorry salary increases are.

Speaker Change #153: Being.

Speaker Change #153: <unk> paid in Q2 as well as.

Head count that we hired in Q1 also going to be fully on boarded in Q2, but overall, we feel very comfortable with what we said to generate $1 billion of free cash flow over the period of 2000 $23 million to 2026 and <unk>.

Speaker Change #153: Having to get the 25% annual free cash flow margin as we said.

Operator: Your next question comes from the line of Steve Enders with Citi. Please go ahead.

Speaker Change #154: Your next question comes from the lineup, Steve Enders with Citi. Please go ahead.

Taylor Anne McGinnis: Okay, great. Thanks for taking the questions, Aaron, and congrats on the results. Pretty impressive, given the macro we seem like we're seeing out there. I guess maybe just to start, I want to ask on the CRM side, and now that that's kind of like fully rolled out or able to be sold into the base, how are we viewing the opportunity to drive that and maybe potentially converting customers who are already using Monday as a CRM into that solution?

Steven Enders: Okay, great. Thanks for taking the questions Aaron.

Speaker Change #156: That's on our results.

Steven Enders: Pretty impressive given the given the macro it seems like we're seeing out there.

Speaker Change #157: I guess, maybe just to just to start I want to ask on the CRM side.

Speaker Change #157: Now that thats kind of like fully rolled out or able to be sold into the base. How are we kind of viewing.

Speaker Change #157: The opportunity to drive that in.

Speaker Change #157: Maybe potentially converting customers who are already using Monday of the CRM into that solutions like do you view that as kind of being the rail bulk of the opportunity or kind of like what are the catalysts.

Taylor Anne McGinnis: Do you view that as kind of being the real bulk of the opportunity or kind of like what are the catalysts to potentially convert some of those customers over into using the full-blown CRM solution from you?

Speaker Change #157: Essentially convert some of those.

Speaker Change #157: Customers that over.

Speaker Change #157: The full blown Sierra insulation from Yale.

Eran Zinman: Yeah, hi Steven, this is Eran. So I'll split my answer into two. I think with the smaller accounts, the SMBs, it's going to be easier. Some of them are not using a CRM, so it was an easy adoption for us. We're also working on a bunch of migration tools, so I think for the smaller customers we've seen, you know, faster adoption, it's going to be easier. For the larger ones, it's a bit more complicated.

Speaker Change #158: Yes, Hi, Stephen this is <unk> so.

Speaker Change #159: I will split my answer into two I think with the <unk>.

Speaker Change #160: Smaller accounts SMB.

Speaker Change #160: It's going to be easier.

Speaker Change #160: Some of them are not using a CRM.

Speaker Change #160: Sure.

Speaker Change #160: So it was an easy adoption for us the other we're also working on a bunch of migration tools. So I think for the smaller customers.

Speaker Change #160: We've seen faster adoption is going to be easier for the larger ones. It's a bit more complicated. It is not just seen we have another product we need to talk with the decision makers.

Eran Zinman: It's not just seeing, you know; we have another product. We need to talk with the decision-makers, so that's kind of another thing we're working on, reaching different functions within an organization and doing more top-down selling to those accounts. And obviously, we also need to lower the price a little bit in order to support it. So I can say that we've already seen great cross-sell from SMBs, and over time, we'll see more and more of the larger organizations adopting, you know, full-blown CRM or Monday.

Speaker Change #160: Thats going to another if you were working on reaching different functions within our organization and doing more top down selling to those accounts.

And obviously, we also need to mature the price a little bit he wanted to support it so.

Speaker Change #160: Can say that we've seen.

The great cross sell from Smbs and over time, we'll see more and more of the larger organizations adopt in full.

Speaker Change #160: Full blown CRM or Monday debt.

Eran Zinman: Okay, great. That's a helpful context. And then I guess maybe on the pricing, on the pricing side, and some of the customer behavior that you're seeing, I guess, maybe how is the, you know, is there a difference between maybe what you're hearing from or what you're seeing from the monthly customers versus, you know, some of the annuals as they're beginning to come up on renewal now that you have a couple months of data here?

Speaker Change #161: Okay great.

Speaker Change #162: That's helpful context.

Speaker Change #163: And then I guess, maybe on the pricing on the pricing side.

Speaker Change #164: Some of the customer behavior that you're seeing and I guess, maybe how is the.

Speaker Change #164: Is there a difference between maybe what youre hearing from or what Youre seeing from the monthly customers versus some.

Speaker Change #164: Some of the annuals as they are beginning to come up on.

Speaker Change #164: Upon renewal or now that you have.

Speaker Change #164: A couple of months of data here.

Eran Zinman: Yeah, so this is Eran again. Overall, like, we're very happy with the results. Like, we haven't seen, you know, much increase in terms of churn. Same goes for downgrades. So, obviously, the months are most impacted because they can make a decision to leave at any given time, basically.

Ron: Yes. So this is Ron again, so yeah overall like.

Ron: The results are pretty solid look we're very happy with the churn profile, we haven't seen.

Ron: Much increase in terms of churn same goes for downgrades. So obviously the month is our most impacted because they can make a decision to leave at any given time basically.

Eran Zinman: And, you know, we ran our own model, and we thought the results were even better than we expected. So, for us, it adds a lot of confidence, and we even expect the annual accounts to behave even better because they're a little bit less price sensitive. So, all in all, in terms of churn downgrades, we don't see any major impact, and we see accounts continue to upgrade their accounts, even the ones that obviously got their price increased. So, overall, I'm very encouraged by the results.

Ron: We ran our own model and we thought the results are even better than we expected so for us.

Ron: It adds a lot of confidence and we even expect the annual accounts two behave.

Ron: Even in a better way, because they're a little bit less price sensitive.

Ron: So all in all in terms of churn and downgrades.

Ron: We don't see any major impact and we see accounts continue and upgrade their accounts.

Ron: The ones that obviously, you got the price increase so overall.

Ron: Very encouraged from the results.

Operator: Your next question comes from the line of Mike Funk with Bank of America. Please go ahead.

Speaker Change #165: Your next question comes from the line of Mike <unk> with Bank of America. Please go ahead.

Mike Funk: Yeah, thank you for the question, and it's good to see reports of weakness were greatly exaggerated in the quarter. I'm so happy to see that.

Speaker Change #166: Yes, thank you for that question.

Speaker Change #167: Good to see reports of weakness.

Speaker Change #168: Ladies AD rate in the quarter, so happy to happy to see that.

Roy Mann: You know, a couple of questions, if I could. So first, on competitive deals, where you do see them, I'd love to get some insight from you on whether or not you're winning more of the competitive deals, and if you are, what you think the differentiator is to drive success with those.

Speaker Change #169: Couple of questions if I could so.

Speaker Change #170: First on competitive deals, where you do see them.

Speaker Change #170: Love to get some insight from you on whether or not youre, winning more of a competitive deals and.

Speaker Change #170: If you are or what do you think the differentiator is to drive success with us.

Eliran Glazer: Hi, it's Roy here. So I think we see great traction within our competitors when we do compete on larger deals. We see that we're able to compete very well, and we are working hard on a roadmap to even close all gaps that we have against competitors. So I think we're in a really great place with work management compared to competitors within the enterprise space. And the CRM and development, like Eran said, it's still early days compared to the other very large competitors out there, but we do see great traction more on the SMB side and compete on those fronts really well. SMB to small mid-market.

Speaker Change #170: Hi.

Speaker Change #171: <unk> here.

So I think like we see great traction within our competitor is when we do compete on larger deals.

Speaker Change #172: We see that we're able to compete very well and we are.

Speaker Change #173: We're working hard on.

Speaker Change #173: On our roadmap to even close those gaps that we have.

Speaker Change #173: Against competitors. So I think we're in a really great place worked management.

Speaker Change #173: Yes.

Speaker Change #173: Compared to competitors within the enterprise space.

Ron: And the CRM and like Ron said, we it's still early days compared to the.

Speaker Change #174: Other very large competitors out there, but we do see great traction more on the SMB side and compete on on those fronts really with SMB to small group market.

Eliran Glazer: Yeah, that's helpful. And the second one is actually multi-part and relates to price and then churn. So first, how should we think about pricing going forward? You know, do you plan on having predictable annual price increases, or will it be more ad hoc? And then, you know, as you do get more cross-sells, can you walk us through how either conceptually or quantitatively you think about that benefiting churn? And then the two pieces together, price and churn, how does that factor into the growth algorithm over the long term?

Speaker Change #175: Okay. That's helpful and the second one is actually multi park and relates to price and then churn so first.

Speaker Change #176: How should we think about pricing going forward.

Speaker Change #177: Do you plan on having predictable annual price increases or will it be more AD hoc and then as you do get more cross sell can you walk us through how either conceptually or quantitatively you think about that benefiting churn and then the two pieces together price and churn.

How does that factor into the growth auger rhythm longer term.

Operator: Sure. So, Mike, this is Eliran.

Speaker Change #177: Sure.

Leon: So Mike this is Leon with regards to price increase we try to make sure that when we increase price we do it we do it based on the value that we provide to our customers. We added a lot of value throughout the last few years and this is why we were only for the first time, we increased the price for.

Scott Randolph Berg: With regard to price increases, we try to make sure that when we increase prices, we do it based on the value that we provide to our customers. We have added a lot of value throughout the last few years, and this is why we have only increased prices for the first time for our existing customer base. So, I think, you know, we don't have a clear answer with regard to what the annual target is yet, but I think overall, we think it will be more tied to value added, you know, value added rather than just having like, you know, the majority of it coming every year.

Leon: <unk> customer base, so I think.

Leon: We don't have a clear answer on with regards to what would be the annual yet, but I think overall, we think it will be more tied to value added.

Leon: Value added rather than just having like.

Leon: The majority of it coming every year the second thing with regards to.

Scott Randolph Berg: The second thing with regard to cross-selling, so I think the combination of us opening the existing products of CRM dev together with work management to existing customers will allow us to see, you know, cross-selling opportunities with the existing customer base and potentially with new customers, but it will probably take a few quarters to get a better understanding of the trend. And I think once we have this packaging of the different products alongside, you know, the fact that we are introducing additional features and functionalities, cross-sale is potentially going to be, you know, with positive momentum, not necessarily having to be tied to a price.

Leon: Cross sell so I think the combination of us opening the existing product of CRM Dev together with the work management to existing customers will allow us to see.

Leon: Cross sell opportunities with existing customer base, and potentially with new customers, but it will take probably few quarters to get.

Leon: Better understanding of the trend and I think once we have the packaging of the different products alongside.

Leon: The fact that we are introducing additional feature and functionalities quarter potentially is going to be.

Leon: We have positive momentum not necessarily having to be tied to a price increase.

Roy Mann: Your next question comes from the line of Scott Berg with Needham. Please go ahead.

Leon: Your next question comes from the line of Scott Berg with Needham. Please go ahead.

Eliran Glazer: Hi, everyone. A really nice quarter. Thanks for taking my questions. I have two quick ones.

Speaker Change #179: Hi, everyone and really nice quarter. Thanks for taking my questions I have.

Speaker Change #180: Two quick ones.

Operator: The customer accounts for CRM and Dev are beginning to be meaningful at this point. How do you think about the types or size of customers that are actually buying that solution today? Are they still some of your smaller customers? Are you seeing some adoption in some of the maybe mid or enterprise customers that you're selling the core platform to?

Scott Randolph Berg: The customer counts for CRM endeavor be ketamine meaningful at this point, how do you think about the tie.

Scott Randolph Berg: Or size of customers that are actually buying that solution today are they still some of your smaller customers are you seeing some adoption in some of the maybe mid or enterprise customers that youre selling the.

Scott Randolph Berg: Platform.

Taylor Anne McGinnis: Hi, it's Roy. So yeah, like, we do see CRM and Dev play way more in the SMB and small mid-markets rather than the larger customers we have. We do see very small, let's say, implementations within larger enterprises. But I think we have a very long roadmap for both products to reach those enterprises, larger enterprises deployments on such products, if that helps.

Speaker Change #181: Hi, sorry.

Speaker Change #182: So yes, we.

Speaker Change #182: We do see.

Speaker Change #183: CRM and Dev play way more on the SMB.

Speaker Change #183: Small and mid markets rather than.

Speaker Change #183: The larger customers, we have we do seem to be very small.

Speaker Change #184: Let's say implementations within larger enterprises, but I think we have a very long roadmap on both products.

Speaker Change #184: To reach those enterprise larger enterprise deployments on such product successful.

Eran Zinman: Very helpful. Thank you.

Speaker Change #185: Very helpful. Thank you and then earlier on you mentioned before contract terms have been pretty consistent I believe it's 80% annual 20% monthly have you seen any real changes on that one way or the other.

Speaker Change #184: Storage.

Speaker Change #184: <unk>.

Speaker Change #186: Times, it may be a little bit of economic pressure customers will either switch to monthly youre only by monthly upfront to give some flexibility into their spending plans just to know if youre seeing any changes there at all.

Eliran Glazer: And then, Eliran, as you mentioned before, the contract terms have been pretty consistent. I believe it's 80% annual, 20% monthly. Are you seeing any real, I guess, changes on that one way or the other? You know, historically, in times of maybe a little bit of economic pressure, customers will either switch to monthly or only buy monthly up front to, you know, give some flexibility to their spending plans. I just didn't know if you're seeing any changes there at all.

Scott Randolph Berg: Hi, Scott.

Scott Randolph Berg: And no I don't see any change to where we are now basically we saw in the last few years actually we saw a transition from monthly to annually I think the 80 20 kind of by and large it is something that is going to be very stable throughout the years.

Eliran Glazer: Hi Scott, Eliran. No, I don't see any change to where we are now. Basically, we saw in the last few years, actually, a transition from monthly to annually. I think the 80-20, by and large, this is something that is going to be very stable throughout the years. And I don't expect any material changes to that.

Scott Randolph Berg: And I don't expect any material changes to that.

Operator: Great. Thank you for taking my question.

Speaker Change #187: Great. Thank you for taking my questions.

Speaker Change #187: Okay.

Taylor Anne McGinnis: Your next question comes from the line of Taylor McGinnis with UBS. Please go ahead.

Speaker Change #188: Your next question comes from the line of Paydown Mcguinness with UBS. Please go ahead.

Eliran Glazer: Yeah, hi, congrats on the quarter, and thanks so much for taking my questions. My first one is just going back to the impact of price potentially in OneQ, and maybe ask it another way. So, Eliran, is it fair to assume that the uplift would have contributed less than $6 million in OneQ if the contribution should have scaled throughout the year? Just trying to understand how we, you know, think about that trajectory. And when you provide that $25 million in uplift, just to clarify, is that the impact just from the installed base, or does that include the year-over-year impact from potentially higher new customer lands as well, too? Thank you.

Taylor Anne McGinnis: Yes, hi, congrats on the quarter and thanks, so much for taking my question. My first one is just going back to the impact from price potentially in <unk> and maybe asked a different way. So all around is it fair to assume that the uplift would've contributed less than $6 million and once you if the contribution should scale throughout the year just trying to.

Dan: Dan how we think about that trajectory.

Speaker Change #191: When you provide that $25 million an uplift just to clarify is that the impact just from the install base or does that include the year over year impact from potentially higher new customer lands as well.

Dan: Yes.

Eliran Glazer: Hey, hello. So maybe we'll start with the second question. With regard to the 25 million, this is taking into account potentially some scenarios that we did for existing and new customers, you know, modeling all kinds of scenarios. So this is taking everything into account. With regard to your first question, if I understood it correctly, I think, you know, the contribution to a strong performance was, I would say, half of the overall business, the healthy top of the funnel, and the fact that we had good momentum with existing customers.

Speaker Change #192: Hey, guys. So maybe it will start with the second question with regards to the 25 million. This is taking into account potentially something else that we need for existing and new customers.

Speaker Change #193: Modeling all kinds of scenario. So this is taking everything into account with regards to your first question if I understood. It correctly I think.

Eliran Glazer: And half of it, I would say, was coming from, you know, the price increase. If the chain profile would have been worse than what we saw, potentially, the numbers would have been lower. If this is, if I understood correctly, what you're asking.

Speaker Change #193: The contribution to our strong performance was I would say a half.

Speaker Change #193: So overall the business the healthy top of funnel and the fact that we had.

Speaker Change #194: Good momentum with existing customers and half of it I would say whats coming from.

Speaker Change #195: From the price increase if the churn profile would have been worse than what we saw potentially.

Speaker Change #196: The numbers would have been lower if this is if I understood correctly, what you asked.

Speaker Change #197: Perfect. Thanks, So much and then my second question is is that now with CRM widely available. This year. It seems like that could be a big opportunity for you guys and I think if I look back last quarter penetration of your total customer base was around 6%. So I guess, how would you just thinking about the trajectory of that business.

Eran Zinman: And I think if I look back last quarter, the penetration of your total customer base was around 6%. So I guess, how are you just, you know, thinking about the trajectory of that business? Because it seems like this year could start to get to, you know, a scale that could add a couple of points to growth. So, you know, just out of the gate, we would love to see some more color in terms of how you guys are thinking about penetration and the trajectory of that. Thanks.

Speaker Change #198: It seems like that could start to get to scale that it could add a couple of points to growth. So just out of the gate would love to see what about just a little bit more color in terms of how you guys are thinking about penetration in the trajectory of that thanks.

Eran Zinman: Yeah, hi Taylor, this is Eran. So yeah, I totally agree. Like the crossing numbers, we're looking pretty solid, and it continues to perform really well. And for us, it just feels like the beginning of tapping into our exclusive customer base. And bear in mind that also for new customers, we encourage them to buy more than just one product when they sign up. So there's a lot of potential for new customers as well.

Yes, Hi, Taylor this is Ron so.

Speaker Change #199: Yeah, I totally agree like the cost of the numbers, we're looking pretty solid and it continues to perform really well and for us. It just feels like the beginning of the.

Speaker Change #199: Taking into our.

Speaker Change #199: Because this is the customer base.

Speaker Change #200: I remind that.

Also for new customers, we encourage them to buy more than just one product when they sign up so theres a lot potential with new customers as well we continue to promote the products in our platform and our homepage and overall, we're very happy with the rate of adoption of those new products.

Eran Zinman: We continue to promote the products on our platform and on our homepage. And overall, we're very happy with the rate of adoption of these new products. And, like we mentioned, we also plan to continue to go upmarket with our bigger customers. So all in all, I think this presents a big opportunity for our exclusive customer base and also for our new customers.

Speaker Change #200: And like we mentioned.

Speaker Change #200: We plan to continue to go up market.

Speaker Change #200: With our bigger customers. So all in all I think this presents a big opportunity for our existing consumer base and also for our new customers.

Speaker Change #200: Okay.

Operator: To ask a question, simply press star followed by the number one on your telephone keypad. There are no more questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining us, and you may now disconnect.

Speaker Change #201: To ask a question press star followed by the number one on your telephone keypad.

Okay.

Speaker Change #202: First of all my question at this time, ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect.

Speaker Change #201: Thank you.

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