Good afternoon, everyone. Welcome to our next session with monday.com. My name is Bob McCooey. I'm the Vice Chairman of Nasdaq. We're joined by the Executive Leadership Team at monday.com. Thank you very much for joining us again at the Nasdaq Investor Conference here in London. Let's get right into it. I want to make sure everybody in the audience knows what monday.com is all about. So can you give a little introductory words about monday.com, the history, and more importantly, I think, what you originally set out to build and how that's changed over the course of kind of the past decade or so?
Yeah, so I can start.
Of course.
Cool, so we started monday.com with the idea of making software for companies fun, that people will actually love using software, because we didn't do so much with a lot of the tools we used. We needed to add development to them to make it what we wanted, and we have kind of like my past background is development, and so does my co-founder, Eran, and so we could develop stuff. And we saw that a lot of people can't, and they get stuck, and they get frustrated, and so we started by creating a platform, and the first go-to-market was project management because it was the easiest one and best fit, but from the beginning, we wanted it to be bigger, something that connects the organization and be at the core of how people work, like that it'll run what they actually work on.
Initially, we thought of tech companies, but when we launched it, it was successful in so many different verticals. We have now over 200 different business verticals. Basically, every type of company you can think of uses us, like from manufacturing plants. People do clinical trial research with us. They manage, I don't know, some I heard manage hotels, but basically run anything you want. Over the years, they formed a category of work management, which is way broader than project management. Because we are a platform, we're not tied to that vertical. We are also so on top of the platform, we launch other products. We launched CRM. We launched dev. Our service is coming this year. They are completely different markets.
The testament of which is like when you see our competitors in each market, they're not competing with each other, none of them, because we're able, because we're a platform to kind of build to completely different audiences. And that's like one of our, I don't know, key reasons for success.
And ease of use.
Ease of use, yeah. It's funny because we've built something that is really customizable, and you can do whatever you want with it. But the onboarding itself, you build your own product, but you don't know it because it's that easy.
Right. I mean, we use it at Nasdaq. We're users. I go on there all the time, and it's very intuitive, which I think is one of the things that makes it, at least from my perspective, makes it so successful. Is that the feedback that you get from clients?
Yeah. It's like when you have a defined problem, you can kind of top-down force people to use something. But when you want them to use it, actually, you have to make it simple, fun, like consumer stuff, what we're used to, and I think more and more software will have to be simpler and more fun.
Hopefully, yes.
Hopefully. Yeah, you're right. Hopefully.
You indicated that you've launched specific products for CRM, product development, and services coming. What's the benefits of these package solutions versus allowing customers to build on their own version of the monday.com platform? Should we expect even more new products coming out?
Yeah. So our products, and for each one of these products, we compete with a different competitor set. And that's how we see it. And our vision is being best in class in each one of these areas. And the reason we package that is people built CRMs on top of our platform before. But when you want to scale and you want to go to larger companies, they want your commitment to that roadmap that you're actually solving this problem, and not they just use it like that. So that's how we came to package. And it's not really a solution. It's like a real product. We have a dedicated team for each one, their own go-to-market. It's like a mini company within monday.com. But the reason it's so good is because of the connectivity as well.
The fact it's a platform, everything we add to one product kind of benefits all the rest. And every capability we add goes into everyone. So we have that compound effect, we call it, that we add one capability, but all the products improve because of it.
Not much to add.
No.
No. OK, good. So you touched on this already, but kind of it seems like there's different target customers and also different competitors that are involved. At the end of the day, why would someone choose monday.com versus one of these other competitors, and especially in some of the most competitive markets? I'm assuming the US is a fairly competitive market versus some of the established players, like CRM, for example. Why would someone choose you?
Yeah. So I think each product is different. And also, something to note is that a lot of our customers come from a greenfield market. They digitize. They come from nothing. A lot of the deals, they just want to make sense of their organization, and they come to us. But in CRM, obviously, a very competitive market. So a good example would be that we started CRM, and within six months, we went from zero to being the top four in G2 Crowd in the review site. And there are hundreds of CRMs there. And the reason is because of the power of the platform. And in CRM specifically, we see a huge gap. If you either have rigid small CRMs and the large ones, like Salesforce, where you can customize them, but it costs a lot, and there is an implementation cost as well.
We're kind of solving that problem in the middle. It's still very easy, very simple, but you can do anything you want. We brought something new to the trade-off. There is no trade-off. But we're obviously not. Our strategy is not to compete with enterprises and stuff. CRM is still, let's say, a younger product, and it has a roadmap to go up and up to larger audiences. In the project management and work management space, we're obviously leading that market of work management. We're mature. We have larger customers and larger deployments.
Maybe I will add to this that we created a PLG product that actually reached $1 billion in a sustainable growth fashion, like efficient, generating free cash flow, profitability in terms of the company performance, and many of the products that we created basically came from the customers, so we started with work management, but why did we choose CRM? Customers started to use monday.com for CRM solutions, and they said, why wouldn't you develop a CRM solution? Same goes with dev. Same goes with service, so once you win the heart of the customers with your product, because PLG means that you actually experience the product, you love it, you use it, and you want to continue to evolve on that.
And we get all these amazing things that actually the customers on the platform that we have. We have also a marketplace where one developer sells to the other. And there are all these ideas that they are developing and enriching the products and enhancing the solution. So for us, it's easier to kind of continue to build on what they give us, not only what we give them. And it goes back to everything that Roy said and you asked him about. It's almost counterintuitive because if you say, how does monday.com sell the software to run a hotel chain management or fleet of trucks? We don't. There are out there, probably on the shelves, solutions for that. But we give you the building blocks, the Lego bricks, to build a solution that will manage your hotel chain and your chain of hotels, sorry, and your fleet of trucks.
So you build the product that fits your need, fits your aspirations. So it's easier to kind of like it and continue to expand with it.
So could we actually say that many companies talk about them being a platform, but you guys really are a platform, truly have created the platform where people are able, in your words, to build on top of it, versus others just kind of throw out the word platform because it's a convenient word to throw out?
I think it's true for a lot of companies. Everyone wants to be a platform. But the question is, are you built in that way? For us, we didn't build a project management tool or a CRM. We built a database that can be adapted to anything. We built an expandable UI set with a marketplace that everyone can build on top of. And essentially, that's how our infrastructure is built. So it's really hard to become a platform post-building stuff because you need to then go back and tear out stuff. So we did it day one. And yeah.
That probably is one of the keys to the success, right?
Definitely. And customers say so it also gives us different go-to-markets, which allows us to grow faster. It gives customers the knowledge they're never going to hit the wall. Whatever they want to develop further on or customize, they know they can do it. And that wins deals.
Obviously, CRM, as we just discussed, has been a great success since its launch. Now you have monday.com service coming out of beta this year. Should the investors expect a similar kind of growth trajectory as they've seen with CRM?
So the reason we come out with new products is we really believe in them. We see the demand. We see customers want it. But it's actually every one of our products has a different go-to-market. So CRM really fits into our performance marketing and go-to-market. So it was just like a really perfect fit to what we're doing. And what we're seeing with service, which shows great and promising early results, is that we're able to go-to-market to existing customers because service essentially is like APM. It's like for everyone in the enterprise. It's not just IT, or sorry, it's ESM, Enterprise Service Management. It's like everyone. You need tickets. You need requests. So it might be legal. It might be finance. It might be IT as well. So wherever we land within work management, the same person that we talk with can also take service.
So we're really optimistic about it and show great early results. But we'll have to see.
Good. So talk to me about the business model. How do you charge? How do you grow it from how you're charging? How do you expand margin that way?
Yeah. I will take it, so when you think about monday.com, kind of we are always planning three, four years in advance, and even more than that, just to get conceptually the strategy and then what we do today in order to execute on this strategy. The business model is annual subscribers plus monthly subscribers to the platform. I would say that more than 80% of the subscribers are annual. They pay upfront. And this is what generates the ARR. The growth is coming from the fact that we have 225,000 customers at the end of 2023. The way we operate is a hybrid business model. You have the top of funnel, the kind of the online marketing channel that is very efficient. And we measure everything through an internal BI system called Big Brain. We measure the return on the investment.
We get the customers into the platform, and then they can expand and scale with us, and in addition to the online marketing and top of funnel, we have the sales-led organization, which includes sales, partners, customer success managers that basically are speaking with the customers and expanding across the segments. We have three segments that we service. One is SMBs, mid-market, and enterprise. These are the customer segments that we're servicing, and the way we continue to grow within the business is by adding additional seats. Every year upon renewal, you either have additional seats or cross-sell or up-sell within the existing customer base, so the model is very stable on that front because you have the recurring ARR that is coming from the existing customers, and you have the new customers that are joining the platform and growing with us.
For example, the two largest seats that seat customers that we have in monday.com, one is 80,000 seats, a healthcare European company, and the other 60,000 seats for a technology global company started with hundreds of seats in monday.com. Over time, they expanded, so this is the model. You land. You expand, and this is the way, and we're going to develop additional models in the future as part or expand into top-down when you actually land bigger from the top to the bottom rather than just coming from the small groups and growing upmarket.
Is the sales channel individuals? Is it a combination of lead demand from online? How are you doing your marketing?
Yeah. So in terms of go-to-market, you get the leads from the bulk of it. Currently, it's getting the leads from the online marketing machine, which is very efficient. They get the leads. And then based on certain enrichment, they are starting to work with the customers. But we're also starting to see more top-down deals that are coming. We have almost 2,400 employees at the end of October. More than 50% are what we call the front office, the sales organization, sales, marketing, customer success, customer support, and partners. So this is kind of the growth engines of the business in addition to the online marketing.
Gotcha. Gotcha. So staying on that, what are you seeing in the demand environment? Are there signs of stabilization, differences by customer size, by industry, different verticals? Help us understand that a little better.
Yeah, sure. So when we did Q3 results, we said that we saw some softness in the month of September. And then October was better. We still see some choppiness in the market. Macroeconomy, still some challenges, mostly in Europe, the Middle East, and Asia-Pacific. North America is stable. So broad-based, we're seeing some stability in some parts of the world, but still experiencing some challenges in other places. I can't say that if you think about macroeconomy, it doesn't get any worse. I think actually it gets better in some areas like North America. But still, we're not out of the.
Yeah. In EMEA, we see some softness. Tough. And how about APAC? Is that a big region for you?
It's not a very big region. It's expanding. We see some slight softness in some countries because we operate in the entire APAC. But overall, it's becoming more stable.
Gotcha. So let's look ahead to next year. What are the investment priorities that you both have to continue to drive your growth? And what do you think about balancing growth versus profitability if we see the macro continue to improve?
So when we look into next year, we're making a big investment in growing the team, growing the sales team. We have new products. We feel we can go to market faster. But it is an investment. It takes them time to ramp. But so this is the plan. And also deepening our investment in R&D in each of the products. So instead of adding new ones, which we can do because we see a lot of other places we can grow in, we'd rather focus and improve the existing product suites, like CRM, deepening it and adding more capabilities, investing in service, in dev, and so on. I would add to that that we believe that the opportunity in front of us is huge. Some of our competitors have been bought. Some are kind of lagging. And we're taking market share. But for that, we will need to invest.
We feel almost like when we went public in 2021, we said we're going to be profitable and free cash flow in 2025. We actually advanced it in two and a half years. We are generating a lot of cash. We are profitable, and to a certain extent, we think maybe we underinvested in 2024 to capture the opportunity, so we will do some investment. We do want to make sure that this is what we call sustainable investment and responsible investment, but definitely, as Roy said, we want to make sure that we strengthen the sales team, we strengthen the R&D team because innovation is in the core of everything that we are doing, and together with all the kind of new trends that are out there, AI and further growth into service, there is a unique opportunity out there for us to capture.
So let's stay on that theme for a second. Some pretty aggressive hiring plans that you have for going from this year, especially into next. Are there certain regions you're focused on? Are you opening up new offices? How should the investors think about that?
Yeah. All of the above. We're investing a lot in North America. We're opening new offices in Europe.
Germany and France.
Yeah, Germany and France, localizing. Brazil is doing great. And we're investing there. Yeah. Outside of we are, when you think about the investment, it's going to be mostly in the CRM organization outside of Israel, scaling and bringing more talent to drive the business further.
Good. So you touched on enterprise earlier. Kind of I know you've had a big push into enterprise over the past few years. Where does that stand? How are you going to continue to be successful in there? Where are you in the journey on focusing on enterprise?
So yeah, I can start. So when we think about enterprise, we have two things. One is improving the platform itself. And let's say for scale and security and governance and standardization, we're adding a lot of them now to allow our customers to scale significantly, to manage thousands of people and their processes together. It's like a huge task. And so we're giving them more tools to be able to handle those things. So that's on one end. On the other hand, it's more internal, how we do sales. Like Eliran mentioned, we've done PLG-type growth, meaning it's more consultative sale. You sign up. We give you a call, ask you what you wanted to achieve, and help you achieve it. And when we are also adding the SLG movement, it's like owning the problems. It's a change a lot of companies go through, like from PLG to SLG.
That's like we're kind of like in the middle of it. That will allow us essentially to go and talk with more C-levels, making more top-down decisions in the entire organization to adopt monday.com. That's what we're hoping to see more.
Yeah. And maybe just if I summarize it or package it in a way that is simple, we're investing in the platform with mondayDB. And now we finished 2.0 that will allow speed, scale, and performance of the platform. We're adding. We're investing in the product. So you have the four products that we have that will allow customers on the enterprise to use all of the products of monday.com without having to go to different technology stack or other softwares. We're investing in people. We spoke about it. We're looking at pricing, already did. We'll continue to improve pricing. And we are making sure that our performance and execution is better. So all of these things that are going in parallel, these are kind of areas that the organization is going to execute on in order to get to the enterprise.
Do you find today that you're at a place where people moving from one firm to another are now a sales channel for you, where someone's used it and now goes to a new firm and almost demands that it's there in order for them to be successful?
It's actually yeah, I don't know the volume of it. But.
Right. It'd be great to know that. But you don't. If I'm using it or my team's using it, and then they go to work at a different company and they say, "Oh, man, I just.
Love monday.com.
I was able to use monday.com. Why are we doing this? It'd be so much more efficient if we were using monday.com for this.
We have stories about people forcing new companies to do it because they know it will succeed and they'll gain a.
They'll get a gold star.
Yeah, they'll get a gold star. They know they will. So a lot of them are doing it. So yeah, it's always fun to watch.
Yeah. It's funny. You go to all these places, and people say, "Yeah, I use monday.com." And it's like at first, it was small. But now it's something that is becoming more kind of the brand awareness is much better.
So I've gone through almost this entire time, and I haven't asked you a question about AI.
Yeah.
So yeah, I know. That was pretty good.
How much time do you have?
I know. I know. I know. We only have less than five minutes. So you've introduced a number of AI features in the past year. Talk about the broader vision for AI at monday.com and the adoption, not only to date, but how you feel like you're going to monetize AI in the future.
Yeah. So first off, we're super excited about AI. I think it will allow us to move our vision way faster and really give superpowers to people we already do. And I'll be very pragmatic. We have really three main pillars of AI. One is democratizing AI, much like we did with building software. We've added that. It was released like I talked about it in the not the last Elevate, the one before our user conference. And it's like a great success. People use it. The adoption is growing and growing. And essentially, it allows customers to automate on their own. They use AI inside our automations and columns and essentially do stuff they couldn't do before automatically, like reading emails, summarizing them, creating action items automatically, and assigning people, doing a lot of work that humans needed to do before. So that's one thing.
The other part is we're taking AI and putting it inside each one of our products to take it to the next level, essentially. I'll give you an example, project management. So project management historically and I don't mean managing one project. I mean managing hundreds of projects together. You don't have predictability. You don't know what will go wrong. You don't know really when to fix it. And if you try and figure that out, you need to harass a lot of people within the organization all the time. And there is a limit to what you can do. And essentially, you need people to tell you when there are risks. What we did is create an automatic risk recognition area.
It kind of takes hundreds of projects and every day assesses the risk on time, on budget, on headcount, and gives you a true risk map for everything that moves every day. And you can act upon. And people, everyone sees it within the project. And it's essentially things humans couldn't have done before. We take project management from being less predictable to being more predictable. We're going to, I hope, shift the entire how you manage projects to being more reliable for everyone. And that's just like one. In sales, we have a huge amount of features to help salespeople and summarize and train and all those stuff. So that's like the second pillar. And the third pillar is agents. I want to call them bots because agents is a technology. It's not a product. But anyway, you'll be able to hire, take a bot.
Essentially, one of the bots will be probably an expert in monday.com. You'll tell him to do stuff, like take these two boards, connect them, and filter the items by ownership of people in EMEA. You can write that in text. He'll do all that stuff. You can imagine how much work or how hard it is to do it with filters and copying stuff. That part we're really excited about because we'll be able to open it up for the marketplace and allow external developers to also develop their own agents that can run on monday.com and help our customers. A long answer and a detailed one. I think with AI, we need to go to the details because there is a lot of hype, a lot of promises.
We personally want to be more concrete and say what we're going to do and actually do it rather than say.
Thank you. We couldn't go through 30 minutes without having at least one detailed question on AI. Eliran Glazer, Roy Mann, thank you for joining us here at the Nasdaq Conference and sharing your insights.
Thank you for having us.