Okay, let's get, let's get started. Hello, everyone. I'm Pinjalim Bora, SMID Cap Software Analyst, at JP Morgan. I'm delighted to have here with me, Co-CEO and Co-founder, Roy Mann. We have Eliran Glazer, CFO. We also have a surprise visitor, Daniel Lereya, who is the VP of Product and R&D as well. All of you gentlemen, thanks for coming to the conference and welcome.
Thank you.
Thank you.
Thank you for having us.
Yeah, maybe you can start with, you know, quick intro about yourself and, whoever chooses, maybe talk a little bit about monday.com as well.
No, Roy, you start.
Okay. Okay. I'm Roy Mann, Co-Founder and Co-CEO in monday.com. My background is in development, R&D. I've been a developer since a very early age, and I love building products, and I love seeing people use them. monday.com for me is basically something I really love because it, like, ties all the things I love to do, like, design, building products, developing things people actually benefit in their lives and actually love using it, and it's still, like, super exciting.
Eliran?
Hi, I'm Eliran. I'm the CFO of monday.com. I've been around in monday.com for more than two years. Before that, I spent most of my time outside of Israel working for companies in the U.S. and in London. Really happy to be part of monday.com, and very happy to be here.
Hi, I'm Daniel. VP R&D and Product at monday.com. joined monday.com when we were around 30 people at the company, six and a half years ago, a bit more. Before that, worked at IBM and SAP. I have a great passion about building products as well and teams, and that's it.
Great. I wanted to ask, well, start on a high level, right? Obviously we are seeing monday.com's results have been really impressive in the space, growing in the 50%, with a run rate kind of approaching $700 million, 100% recurring revenue, generating free cash flow. I guess you'll be profitable on the P&L as well this year. All this in a very competitive kind of market. Roy, maybe I'll start with you. What is kind of the underlying phenomena that is allowing this business to scale rapidly in a profitable way in an uncertain macro environment?
Cool. That's like a great question to have for... monday.com has been a platform ever since we started it, meaning that we give people the power to build their own software. I think it brought us, like, a lot of stability. We're very broad-based. Like, we have customers on 200 different verticals, a lot of countries, at all scales of customers. 30% is tech, but 70% is non-tech. We're very stable across the board. What we've seen, I think in the recent quarter or two, is how much we are at the core of businesses, that they rely on us to run their businesses, and especially SMBs.
I think even in a challenging macro environment, we see how much they are dependent on us and rely more on us when they wanna be more efficient, and when they want to scale. I think it gives us a lot of stabilities on all fronts, no matter the situation.
Maybe just to add to what Roy said, maybe to provide some of the financial view. You know, we were very consistent with the way we said we are operating the playbook of monday.com. You know, when everybody was speaking about growth at all cost, we were speaking about sustainable growth. We spoke about efficiency, the way we measure the business. We have a BI system called BigBrain that measures everything that we do. When some of the competitors pulled back, we actually doubled down on our investment. The way we manage the business is, you know, we try to be proactive, very efficient, take advantage of everything Roy said, the platform and the capabilities that we have.
You know, this is one of the things that we think is a main driver for the performance, the financial performance as well as the business performance.
Yep, understood. Roy, one more question on just kind of the long-term aspiration of the company, right? You have kind of dominated the mid-market space with the Work OS platform. You are upgrading your infrastructure to better scale, maybe tap in bigger customers as well. As you think about, let's say five, 10 years from now, right? Is your aspiration to become kind of the de facto standard in the mid-market? Do you wanna go chase the biggest customers of the world as well? Do you wanna do the entire gamut from the small to the largest customer? Like, how do you think about the long-term aspiration that monday.com has?
Yeah. The short answer is we want it all. The longer answer is that we've always started from the bottom up. I think it's like a great power we have. We're like easy to use. People love us, and they adopt us on the team level, also in small companies, but also in the enterprise. We scale up within those organizations. The way we scale up will always improve. Like, we are always adding capabilities, adding more scale, more compliance to scale to larger and larger deals, larger and larger deployments, more complicated solutions. Instead of doing a journey like many other SaaS companies where they go upmarket, we wanna add upmarket 'cause we understand the power within the simple adoptions of small teams is critical.
It's critical to keep us simple and easy to use and to adopt. It's critical for a mass adoption of the enterprise and the fact that everyone will love using it. It's not only a top-down, like, management solution, and it has to be something people love using on a day-to-day and gives them value. It's both great economically, but also a better product in our eyes.
Yeah. Definitely the, the bottoms-up motion resonates when we talk to a lot of your customers, for sure. So the other question I get most of the time in this space is competitive differentiation, across the various products. It is a crowded space. We know the public ones, there are a lot of private ones as well emerging. How do you think about kind of the competitive difference that monday.com provides? You know, you talked about platform. Is that the thing which makes it much more expandable than some of the other things or anything else that you add?
Yeah. From our standpoint, it's a greenfield market. Like, 70% of our deals we see no competition on at all. The world is digitizing. We see a lot of growth in a lot of areas and like, although there are many solutions, I think we're super successful in the non-tech and we don't see it as such a competitive space. Where we do see competition, it's very vertical oriented, if you like, or segmented for us. Like, in the work management, project management space, we see Asana and Smartsheet. In our CRM, we see other CRMs. The competition from our perspective is not one. We can't point to one competitor we're competing with, but rather multiple ones.
What enables us to play on different, completely different markets is the fact we are a platform, we are a Work OS, we are also winning deals, the vast majority of them, we win because we are a platform. That's what our customers buy into, the fact that they are never going to hit a wall. They can build it to solve many other problems other than the one they, like, specifically think about now, and they essentially buy into the future of the platform.
Yeah, the platform. Yeah, not hitting the wall or not hitting the ceiling is another thing that we have heard from customers, which resonated with what you're saying. Obviously, in one of the discussions that we had actually with one of your customers, somebody said that they're moving off of Zendesk into monday.com, which is basically a ticketing workflow, which you don't even have as a productized solution, right? I want to ask you, is this opportunity of tool consolidation, right? Not only within work management, but outside of work management, is that real today? Are you seeing a lot of these tool consolidation rolling up of spend in favor of monday.com?
Yeah, definitely. I think it's way more in the SMB side, where, you know, we see it as a very solid area within our customer base. Mostly because even if they had a tougher time now with the economy, they consolidated on us a lot and they replaced, like, a lot of very small vertical solutions, one might have, like, over time, like event management or ticketing, like you said, I don't know, like budget or purchasing software. Like a lot of different vertical specific solutions that they can just, like, build on top of monday.com. So, they do rely more on us.
Yeah. I guess that takes me to the most common question nowadays that we're getting across software is Generative AI, right? I'm assuming that AI actually probably makes the usage of the platform even easier at some point, right? Help us understand kind of how are you thinking about Generative AI across the platform at this point.
Yeah. First off, we see this as a great opportunity. I think our job as monday.com is to kinda package technology in a way customers can use it. 70% of our non-tech audience that kinda just digitize their business and moving from, like, basically spreadsheets and phone calls to something digital. I think we're in a really great spot to kinda take AI and bring it to them to introduce to their business. We see a lot of opportunity there. On the other side, and I'll let Daniel expand on that, like, we rolled out a few exciting features just now and are also opening the platform completely to third-party developers to extend it. I think what you said is true. AI in general, we see that, like, that's Microsoft.
What they're doing is, like, placing it in their entire product ecosystem. We see everyone kinda sewing in AI really well into their existing solution, and there is a reason for it, 'cause this is the place we work, you know, all those tools, and AI should help us with that, should help us make it better, faster, introduce new capabilities. You know, I think it's like whoever don't... Like, you have to execute quickly. Now on the one hand, but on the other, it became so simple to implement that everyone is doing it really quickly. It's like so quick getting into places. I think it's like something that will be... We'll see continuing, like, over years from now. Like, all the time we're adding, we'll add more and more stuff.
Yeah, no, I think you covered it, yeah.
I guess the question is then, right, Generative AI, as you're saying, it becomes easy to kind of implement, and everybody's doing it. Does that become kind of table stakes versus companies trying to differentiate in AI? Does the platform actually gives you an edge versus the others in that case?
I think, the first thing I said is not that obvious, that, you know, we will keep using the same tools in a way 'cause that's what's convenient for us. I don't think word processing will go away, like document editing. It's still very convenient to type things on a computer rather than start talking with someone that will do it for us, okay? The best place for that is, I don't know, in a document editor, right? I don't think that will go away. I also think that if someone will build the best document AI editor for, let's say, lawyers, okay? They're not going to displace Office, okay? 'Cause Microsoft can introduce that as well, and it'll take them a very short while, weeks.
Yeah.
I think you can't really displace players from where they are at with their audience, unless you are not adapting it quickly to AI. I think we have to add it. I don't see it as a huge advantage for companies that like, you know, will have AI disrupt completely, like software that people work at day to day, you know. 'Cause there is a reason we work at day to day. If you take the human entirely out of the equation, that's a change. If you need to see it, and like, let's say in our business workflow and work management and collaboration between people that work together on your main workflow and having information all in one place, okay?
If you still wanna have that, and I can't see how, that will change, you know, then, the interfaces where it'll happen, and then you add AI. Given that it's that easy to develop AI software today, you know, I think a lot of people will do it, and it will be like something that is, you know, everyone has to have.
Yeah. I do think that, you know, just to add on that, I think that we as monday.com have such unique perspective about work with so many different verticals that does work on monday.com and so many different industries. In that sense, we're really excited about AI because we feel that it will help us drive the direction of helping others to build software. Think about, like, using all this information from one hand and this amazing technology to allow people to use monday.com even more as a platform for building the best product for them, this is something that we definitely imagine, and we think it can be transformational, especially for people that we mention it are currently non-tech. They are using pen and paper. Suddenly, we are the one who makes it all accessible for them. Yeah.
The strategy to open up to third-party developers, right? And to develop on top of your AI kind of framework, is that mainly aimed for kind of vertical apps that you might not go after, kind of expanding the market, maybe legal or something else, right? Is that kind of the way to think about it?
AI in general is has to have a layer of its own, right? It's not the software itself. You have to have a suggestive layer somewhere that you kind of talk with AI or, and have that interaction with it. What we've done is create that as a platform. Everywhere you can embed whatever you want as a suggestive layer that you can build any one of our applications that is in the marketplace can add their own AI capabilities. What you gave as the document editor is just one example. Another is the board allowing us to build an, let's say, organizational consultant AI tool that helps you build your own workflow that we will train from our unique data set of workflows.
everyone can build whatever they have on top of it.
Yeah. Yeah, yeah. Last question on AI. I'll shut up after that, on AI. This debate about pressure on seats versus driving productivity higher, how do you think about that, as you're rolling out these AI capabilities?
Yeah, it's a good question. I think, like, we are in a time in the company that our penetration within our existing customers is small, and every incremental productivity gain we give that is so dramatic as AI will just increase seats and payments on those, like, values. I don't think AI is going to be embedded in the platform without like, on the same seat cost. You know, it has so much value, you customers would be happy to pay more for it. I think, conceptually, like, pricing and revenue-wise, I think it will increase. I also think there is a good chance we'll get more seats out of it, even if the seats, in general, decrease. Yeah, that's our perspective.
Yep. Yep. Got it. Okay. Pivoting a little bit, let's talk about macro. That's another topic of discussion nowadays. You recently, well, it was last week, I guess, reported really strong results. I mean, how would you kind of sense the business environment at this point? You know, just talking to customers, what are you seeing?
So what we see, like, I'll refer to the results, right? Like, what we see is like, on the downside, just less upgrades, like everything else is very stable. So we don't see the. We, we are coming down in the NDR from historical highs of last year, where we had a lot of growth within enterprises and large customers who also, like, saw their growth in seat count. And now that that's gone, you see the NDR coming down, and they're not upgrading like they used to. But in terms of stability and all that stuff, it's very stable, like, retention-wise, of the ARR. On the other hand, we see like a very healthy top-of-funnel demand.
Like the customers we get that sign up for the platform have, like, stronger intention 'cause the people who are looking now for solutions obviously want them more than in other economic situations. We get more market share out of those customers because mainly because of our ability to track really well where we put each $1 on performance marketing using our internal BI tool called BigBrain. We know really how to measure every $1 we spend, how much we get back on every campaign. It enables us to kinda keep at the same pace and even increase where others are drastically decreased compared to what they did last year.
Even if they, like, it'll stabilize and maybe their spending will go back up, we will still get more market share than we got last year when, like, the spending was like, completely out of, you know, return conditions. The top of funnel is really healthy.
That's always good to know, top of funnel healthy. I wanted to ask maybe Daniel on the mondayDB upgrade, right? We talked to investors. I actually got some questions from investors saying, "Why are they offering a database?" which is not what mondayDB is. Talk about, you know, what is the aspiration around mondayDB upgrade. Seems like you're kind of ahead of expectations now. You'll be finishing it by Q2, but it's 1.0. You'll have more versions of that, I understand that. Yeah, help us understand what does that enable you, and could it be actually a tailwind to the business, you know, looking forward?
Yeah. First, let's just say mondayDB is not a product that we are going to sell. Rather, it's our new data infrastructure. I think that, mondayDB, in essence, you know, monday architecture is quite unique, and it's what Roy talked about being so flexible. Basically, it means that we are in a schemaless architecture where everyone can build their own products. In order to support such a unique architecture with great performance and scale, it's quite a challenge engineering-wise, and mondayDB is here for that. mondayDB is actually our solution of providing better performance, better scale, for this unique value that we are giving of the flexibility. It's indeed comprised of multiple versions. The first version is around faster boards.
We are happy to share that we already rolled out it to over than 50% of our accounts ahead of plans. Next versions that are coming this year would be Version 2.0, would be around faster dashboards and also additional scale around the end of the year and beginning of next year. In terms of the value, I think that mondayDB would benefit everything that monday has to offer. I think that from one hand, people can suddenly build much more elaborated solutions. It means new use cases. It mean more growth of the existing customer base. Also it's tailing for our new products as well. Think, for instance, about the monday sales CRM. Having the ability to capture more leads, for instance, is very meaningful for our ability to continue and push up.
I think that the right way to think about mondayDB is that it's actually something that will drive everything that we do forward. For us, it's a new ballpark in terms of what we can achieve, our motion, going up market, larger deployments, so we're really excited about that.
Yeah. Do you have anything to add around growth, tailwind? No. Okay. Just checking. One thing I wanted to ask you is I heard that prior to mondayDB, there was a limit of about 30,000 rows in board. mondayDB expands that to 100,000, apparently the Version 1.0, and with a aspiration to go to 1 million rows. Is that how we should think about kind of the progression?
First, we have our current limits. At the beginning, we want mondayDB, the festival boards and dashboards to increase the performance within the existing limits. Later this year, we do want to raise limits. I think that, you know, limits, many times people talk about the number of records, but I think that in Monday, what we enable customers to do with their boards is super unique in terms of what you can do with each one of these work records, let's say. It's not only the data that you have there, it's the automations, it's the permissions, it's the connectivity between different boards, it's the visualizations and so many more things. Although we are not in V1 raising our limits, we really feel it actually provides a lot of room to grow.
later this year, we're also going to raise the limits and also next year. It's an ongoing effort. Yeah.
I hope that over time we'll always say we're, like, increasing the limits.
Yeah.
Like Daniel Lereya said, it's like kinda magic. It's not just like a number of rows, it's like the things you can do with them and, all the stuff customers can build on top of them, that makes us very unique and powerful. Over time, we're going to increase the limits all the time.
Got it. I wanna talk about sales CRM, which that product seems like it's on fire. You kind of doubled the number of customers, I believe, sequentially versus last quarter, Q1 to Q4. What is driving that, you know, that solid traction in that product? Who are you seeing in the market around that product?
One important thing is that we're showing the number of its accounts and not customers. It's a little bit different than other metrics, which are customers. It's scaling really fast compared to, like, how monday.com scaled in the beginning. It's like 5 x as fast as monday.com itself scaled when we started. We're excited about it. For us, the most important thing to emphasize is that the CRM is a thin layer of software built on top of the platform itself, you know. What we used to see when people signed up for project management, they said like, "Oh, this is the great project management tool. I can build whatever I want.
I can do this and connect it and have other stuff connected to it, and it's like super powerful project management." Now they're saying the same thing about the CRM, but what they're saying essentially is that, like, the platform is what makes it so great. When we look at the competitive landscape, what we see is two things. One is that CRM is a great market for digitization. A lot of, like, companies, when they go digital, it starts there, like managing their customers' relationship. We see it as a greenfield as well and a lot of scale on that front. Another big part of the scale is companies maturing from other CRMs. I don't know if you got a chance to see the G2 Crowd CRM competitive landscape.
It's like tiled with like 100 CRMs, and we're like on the top four or top three on the top right, and we got there like super fast, like, you know, within 6 months. The reason is a lot of companies maturing from other, let's say rigid, more rigid CRMs that are built in a certain way, and you can't really change it and do whatever you want with them. When they graduate, they now have us as an alternative that is like very simple, easy to adopt, and, and those are great customers. They know what they want. They're maturing. They're doing that because they're successful. That's like exciting in this space specifically.
Yeah. I want to see if you, if anybody has questions, as well. I think we have a mic at the back. If anybody has questions, please raise your hand, and we'll get the mic. Don't see any as of now. The kind of continuing on Work OS, you had not opened it up to existing customers. I think last quarter you said you have opened it up to selected number of customers. Help us understand kind of the opportunity in that existing base. You are pricing some of the Work OS products, I think a little bit higher than the base product. How to think of the opportunity in the existing base?
Eliran, maybe you can talk about how can it impact the net retention at some point.
Cool. We still will refer to the CRM as a Work OS product built on top of the platform, the Work OS platform. Essentially, we are just enabled existing customer to start rolling it out. The reason we've done it now is that a lot of our customers have really complex workflows, and we wanted the CRM to grow like a startup, to start like small for us to learn, for the organization itself to also learn enough to help those customers. When you go after a more, let's say, horizontal solution that is specific like CRM, the customers expect you to understand what CRM is. We needed to train the sales team and learn ourselves. Like each time we mature, like, it takes us...
It will take us a while to reach that level of maturity for the larger organization. We're very conscious about that. I'm excited to see how we're going to roll it out to existing customers. There is a very strong demand for them that we will do it. Now that we've started, it will be exciting to see that.
Maybe just to add that, you know, we were transparent about the fact that NRR for the end of the year, we see moderate pressure. It's going to be 110% for all customers and 115%-120% for the larger accounts. The combination of what you heard earlier about tailwind of mondayDB together with the product that we are introducing to the market, CRM and monday dev now is in beta. I believe that, you know, once we get traction this year with existing customers going into next year, potentially there's going to be opportunities for upsell and cross-sell, and this will positively, I believe, will impact the NRR.
I don't want to tell you that it will be immediate, but I think obviously if we're going to have expansion within existing customer base, then we're going to see stabilization and potentially uptick with NRR, yet to be seen, but this is a direction.
Stabilization around 110 and then maybe there's an uptick.
Yeah.
Yep. Okay. Understood. Then you have also launched monday dev . I think that's out of beta, if I remember that correctly.
Yeah.
Talk about that. What is that going after? Seems is it going after something like a Jira or Atlassian products? Like, talk about that. What is kind of the traction or, you know, what are you hearing from customers? I know it's very early, but.
First, it's indeed very early for monday.com dev, but this quarter we announced it's out of beta. For us, it symbolizes that we have like the initial product market fit and enough value to say that we feel that it's a good solution for different teams that does software development. I think that indeed, in terms of the competition, it's mainly Jira. What we get as an initial feedback, which we found very, you know, encouraging, is that, first of all, people really enjoy using the product. I think that this is something that is really important for us for across all of our products, but I think that specifically for dev, it's something that, you know, could be very meaningful.
Another important thing is that I think that also in terms of software development, the world has progressed, and now it's not about just engineers, it's also about the product teams, and it's also about the designers and the data practitioners and so on. One of the best feedbacks that we are getting is that with monday.com dev, they can connect the work between everyone that are working on the projects, including also the client-facing teams. Support, for instance, getting feedback from tickets, and it can be with the sales and the marketing. It's definitely two main values that we see repeating in customers feedback.
Got it. Any questions? No, I don't see one. Eliran, maybe we can end with you since we have one minute. You had a great quarter and you raised revenue, which, not many companies are doing at this point in time. Talk about, you know, what gives you that confidence and maybe touch upon the profitability side as well. How should we see that beyond kind of fiscal 2023?
Sure, you know, we went public two years ago, eight quarters in a row that we exceed expectations. Everything that Roy and Daniel spoke about. You said you spoke with someone who actually said he's going to maybe replace Zendesk with monday.com. I think what companies can do in monday.com is limitless. When we say it, sometimes it's hard for people to understand, but we see that the stickiness, the retention, the profile in a challenging macro environment, we're doing well. It provide us with the comfort and, you know, confidence that we will continue to see upside across our business. That is why we feel comfortable with everything that we are doing to raise the numbers, to raise guidance, and to be more optimistic about the future of monday.com.
What was the second question?
profitability.
Profitability, we said that we're going to be originally by 2025. We are ahead of schedule, I want to stress the fact that growth is still the number one priority. Equally focused on improving margin and showing that we not only gaining profitability, but we grow at scale. If we are going to see opportunity out there in the market, we are going to pursue it. I think this is the time for us to take advantage and double, you know, double down our investment. Thinking not only about 2023, but also about 2024, 2025, when our, you know, when our competitors pull back, this is the time for us, if we see the returns, to put the leg on the gas, and this is what we're going to do.
Okay.
Profitability will come with it.
Okay. With that, thank you so much for the time. Thanks for the presentation.
Thank you. Thank you.