Earnings Call: Q2 2021

Aug 17, 2021

Ladies and gentlemen, thank you for standing by, and welcome to the monday.com Q2 Fiscal 2021 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. I I'd now like to turn the call over to your host, Cadence Hough. You may begin. Certain statements made on the call today may be forward looking statements, which reflect management's best judgment based on currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release for more information on the specific factors that could cause actual results to differ materially from our forward looking statements. Additionally, non GAAP financial measures may be discussed in the call. Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release the earnings presentation for today's call, which is posted on our Investor Relations webpage at ir.monday.com. With that, I will turn the call over to Roy Mann, Co CEO of monday.com. Thank you, and thank you everyone for joining us today. We are very excited to have completed a successful IPO and to announce Very strong results for our Q1 as a public company. As you've seen from our press release, our business continues to accelerate across revenues, Pay customers and customer expansions. We generated $70,600,000 in revenue, up 94% year over year. Eliran, our CFO will provide you with more financial details and commentary on what drove Q2 results. He'll also provide our guidance for the rest of the year. Since this is our first earnings call as a public company, I'd like to take a few minutes to tell you a bit about monday. We've also posted a slide deck on our IR website that provides you with additional color on our business and a review for our Q2 financials. When we first started monday.com, we started it with a mission, to give our customers the power to create their own work software. To do that, we revolutionize the way people use software, giving them the same low code, no code capabilities once reserved for software creators and designers. Today, more than 9 years later, our customers use minde.com in ways we could have never imagined across virtually limitless use cases and in an organization of all sizes. With that mission, we are leading in a new category called Work OS. Eran? Thank you, Roy. Before we dive deeper into our platform, we'd like to highlight our market opportunity. Our WorkOS is broadly applicable for any organization and team across a growing number of use cases. According to estimates from IDC, Our total addressable market was $56,100,000,000 in 2020 and will grow to $87,600,000,000 in 2024. Further, we believe our WorkOS platform is applicable across the 1,250,000,000 information workers that interesting analysts estimate exist globally. Now let's dive deeper into our platform. Our cloud based platform is a no code, low code framework. It consists of modular building blocks that allow our customers to create their own software applications and work management tools. By using our platform, our customers can simplify and accelerate their digital transformation, Create a unified workspace across departments and increase operational efficiency and productivity. Our software is simple enough for anyone to use, yet it's powerful enough to drive core functionality within any organization. Our platform also integrates with our systems and applications, creating a new connective layer For organization that links departments and bridges information silos. We believe this makes our WorkOS a core solution that customers can rely on to run their business. Our customers are our partners. We are continuously molding our platform future together. We distinguish customers with more than 10 users from our broader customer base, and they are the core focus of our sales and marketing efforts. The revenue growth rate of our customers with more than 10 users has outpaced the rest of the business in each of our previous fiscal years. And our expectation is that such customers will continue to grow in the future. Moreover, our ability to successfully move up market It's demonstrated by the consistent growth in the number of our enterprise customers, which we define as customers with more than 50,000 in ARR. We ended the quarter with 470 enterprise customers compared to only 144 in the year ago quarter, an increase of 2 26%. We employ an efficient go to market model, combining our extensive self-service funnel and a direct sales approach, which consists primarily of our sales team, our customer success and partners team, as well as our apps marketplace. I want to share some of our product solution go to market approach. Product solutions are complete products, horizontal or vertical built on top of the Workhorse platform. This allows customers with different intents to find and adopt Monday. Now I'll turn this over to Roy to discuss our apps and ops marketplace. Thank you, Eran. We took our no limits approach to new heights to allow any developer to build on top of monday.com with monday apps. We added even more freedom with our app marketplace, where each customer can extend the platform on their own. This no limits approach leads to happy customers that not only love our product, but also feel they're part of our journey. As the number of our customers grew, we heard more and more stories on how we changed their business and for some their lives. We began to feel an ever growing sense of responsibility, a responsibility to be there for our customers with a world class support and an ever improving platform that allows them to do anything their business demands or their imagination takes them towards. This responsibility extends towards the communities we live in as well. We saw the amazing impact monday.com has on non profit organizations. From work we have done together, we see that many non profit organizations have a massive technological divide, a device that prevents them from making the impact that they seek. Our equal impact initiative aims to close that digital divide with the long term ambitious With our knowledge and resources in digital transformation, Running businesses and scaling teams, we aim to be a partner for the world's non profit organization who want to make a positive change for all of us. I want to give a quick shout out for our employees. Monday.com success happened only because of our amazing employees and the strong culture of transparency, Ownership and trust we have built together. All of us at Monday feel we share the same goal and walk on the same path forward. We believe that we are on the cusp of a massive change in work software. If the last 10 years were defined by the SaaS cloud, In the next 10 years, we'll be focused on giving people the power to create software that fit their own needs. We believe that we are best positioned to be the leaders in this We have built the company to take such an opportunity head on while keeping our culture, our values and the love we We'll have towards creating beautiful, powerful digital products. Today, we are thrilled to introduce a completely new capability to monday.com's WorkOS platform. Monday, WorkDocs. WorkDocs represent the next step in our WorkOS platform. Documents provide a great canvas for people to start their work in. We see this as a massive opportunity to expand how Monday is adopted so our customers can create no code, low code work software. With Monday WorkDocs, our customers now have the ability to manage their work Ideas and data in a completely unstructured way. Our work docs include 2 powerful technologies embedded in them, Our real time engine and document connectivity. We believe document based collaboration is crucial for many work processes. That's why we've built our real time engine from scratch. It's a completely new technology that allows for hundreds of people to work together on the same document. It's a strong foundation that will allow us to take document collaboration to uncharted territories. Another critical part of our work docs is that they are connected to other applications. We see this as part of our connectivity layer that the Work OS provides. We allowed Any Monday object such as widget, chart and views to be embedded into documents. This means that our work docs have Live objects that update in real time whenever their source of data changes. So, many work docs are never stale because they are connected documents. This make WorkDocs another no code way for our customers to build work applications on top of manly.comworkos. Traditional documents were never designed to be used in the way many teams use them today. Teams use documents to start work processes and collaborate together, but the documents themselves were never created to support this. We see this as an opportunity to turn these beginnings of documents into real work tools that people can use to work together better. WorkDocs To represent the next step in our journey to give our customers the ability to create their own work software, no matter how they begin or continue their work. Until now, boards were the sole entry point to our platform. Work docs are an additional unstructured, more flexible way to onboard and deepen adoption in companies. WorkDocs are now live and working on Monday's Work OS and are available to all our plans. Eran? Thank you, Roy. In Q2, we officially launched a free tier of money.com Work OS. This is geared to small teams and limited only to 2 users. We believe that this is an excellent way to drive awareness and broader adoption among a new set of audiences. We're encouraged by the earlier response to the free offering and see this as a way to seed Monday usage and ultimately drive conversion to enterprise customers. We had a great quarter in terms of customer wins and expansions. These were broad based across industry verticals with major companies including Headspace, Mintel, Adian and Wallet and Altus. Let's talk about Headspace as an example. Headspace is a very well known mindfulness and meditation app dedicated to improving the health and happiness of the world. Hatspace has begun to use mind.comworkOS to increase collaboration and efficiency for all of their marketing and creative processes across the globe. In order to win, Subscription based companies like Headspace must operate in real time, adjusting to changes in each of their markets every day, which is why they chose our platform. This win is another example of how monday can help high growth global companies and we're very happy to be part of their growth and success. During Q2, we continued to expand our partnership ecosystem. To that end, we kick off a new strategic alliances with global system integrators across key industries, such as manufacturing and real estate, including Hitachi Solutions and NTT DATA. We accelerated our growth and expansion into the Latin American market with new channel partners, customer deals, increasing our ARR in this region. As part of our expansion into new markets, We also added Polish as an additional language available on our platform, increasing the total number of languages to 14. One of the things that we are most excited about is that we are truly developing a money.com ecosystem of 3rd parties. Interfaces, partners and developers that collectively drive usage and multiple monetization opportunities. You will be hearing much more from us on this front in the coming quarters years. As I hope has come through in our presentation and in our comments today, meridian.com is a highly differentiated company with a strong and unique point of view about the future of work and collaboration. We are capturing a massive market opportunity that is expected to reach over $85,000,000,000 in the next few years. Money.com can help drive results for almost every business of every size around the world. We're very excited to speak with the analysts covering the company and the investors who are joining us on this journey today. I'll turn it over to Eliran to cover our financials and guidance. Thank you, Roy and Deran, and thank you to everyone for joining our call today. We are very excited about the opportunities we see for the company to continue to grow and evolve. I will go through our Q2 results, then discuss in more detail the business and close with guidance. We were pleased with the results for the quarter, which demonstrated continued high growth at scale. Revenue in the 2nd quarter came in at 17,600,000 up 94% year over year, led by large expansion within our existing customer base. Our net dollar retention rate for customers with more than 10 users was over 125% and our net dollar retention rate for all customers was over 111%. As a reminder, our net dollar retention rate is a trailing 4 quarter weighted average calculation. Also, Our focus on moving up market is working. We ended the quarter with 470 enterprise customers, up 226% for 144 in the year ago quarter. On the hiring front, during the last two quarters, we added more than 170 employees to monday.com, particularly focusing on R and D and sales and marketing. These new hires account for more than 70% of the new talent added during this period. We ended Q2 with more than 850 employees globally, and we plan to continue investing aggressively in adding new talent with a focus on R and D in our enterprise sales force. Next, I'll provide more detail on the Q2 financial results. Before turning to expenses item and profitability, I would like to point out that unless otherwise noted, all metrics are non GAAP. We have provided a reconciliation of GAAP to non GAAP financials in our earnings release. Gross margin came in at 89.7%, up from 88.3% in the year ago quarter. Research and development expense was $11,200,000 or 16% compared to 20% in the year ago quarter. We continue to invest significantly in R and D, including high growth in our engineering headcount, but the pace of our revenue growth has outpaced the investment growth. Sales and marketing expenses was $55,500,000 or 79% of revenue compared to 101% in the year ago quarter. The improvement Was driven primarily by lower marketing investment as we are becoming more efficient, allocating our marketing spend to focus on customers with 10 plus users and enterprise customers. We continue to make substantial investment in our sales organization and have significantly expanded our sales team over the last year. Similar to R and D, the pace of our revenue growth has outpaced the investment growth. G and A expense was 6,500,000 or 9% of revenue, compared to 8% in the year ago quarter, reflecting increased cost of being a public company. Operating loss was $9,900,000 and operating loss margin came in at 14%. Net loss was 11,300,000 and loss per share was negative $0.26 Moving on to the balance sheet and cash flow. We ended the quarter with approximately $878,000,000 in cash, cash equivalents, short term deposit and restricted cash. Net cash used in operating activities was $400,000 in the quarter. Adjusted free cash flow was negative $1,500,000 and was driven by strong collections stemming from our strong billings in Q4 and Q1. Adjusted free cash flow is defined as net cash from operating activities, Less cash used for property and equipment and capitalized software costs, excluding nonrecurring items such as costs related to the buildup of our corporate headquarter Now turning to our outlook for the Q3 and the full year of 2021. We believe we can deliver high growth For the foreseeable future, as we are addressing a large and growing market and we believe we are well positioned to be one of the long term winners in this space. There are more than 1,000,000,000 global knowledge workers today that could potentially use Mande. We're introducing Q3 and full year guidance as follows. For the Q3 of fiscal year 2021, we expect our revenue to be in the range of $74,000,000 to 75,000,000 representing growth of 74% to 76% year over year. We expect non GAAP operating loss of €26,000,000 to 25,000,000 For the full year 2021, revenues are expected to be in the range of $280,000,000 to $282,000,000 representing growth of 74% to 75% year over year. We expect full year non GAAP operating loss of $93,000,000 to $91,000,000 and negative operating margin of between 32% compared to negative operating loss of $86,200,000 in 2020 and negative operating margin of 53%. We believe we can deliver high growth for the foreseeable future as we are addressing a large and growing market that is still very early in its maturity. As a result, we will continue to prioritize investments in the business over near term profitability, and we continue to make progress against our growth phase target margins. I'll also note that we intend to be active with regard to Investor Relations and we'll be conducting a number of non deal roadshows and starting to present at investor conferences in September. With that, I'll turn it over to the operator for questions. Operator? Our first question comes from Kash Rangan with Goldman Sachs. Hi, thank you very much. Lovely day. Fantastic results and congratulations on the Q1 as a public company. What a great start. Roy, one question for you. You talked about sales and marketing investments. Can you talk about how should we think about How productive the shift towards more selling and a little bit less marketing as it pertains to sales and marketing It's likely to drive traction of the enterprise going forward because it certainly seems that you had a great quarter, but you're just getting started building out and scaling your sales effort for the enterprise. And one for you, Eliron, it does look like you made significant progress with operating Margins and free cash flow, yet your guidance still calls for a snap back to the previous levels of of losses. So just wondering if there's any specific investment you're making in the second half or just trying to keep things conservative and wait till The quarter has approved themselves. Thank you so much. Congrats. Kash, thank you. It's Roy. So yes, we're putting a lot of emphasis on growing. Like we mentioned before During the IPO, we have a funnel that is driven by And no touch like we do marketing that we get leads. Those leads become paying customers and our sales force Are addressing those customers after they pay and help them scale. So while we invest a lot in marketing, We see that we're doing that in a more efficient way, okay? This is what you can see with the results of this quarter. Our approach to new customers is becoming more efficient. While we scale the sales team And each approach to grow our customers way more. So you see both of these Working really well. And I think we're, as we mentioned before, seeing Our sales team that has been growing in the last 2 years reached more maturity and it's like working better and better. And Kash, hi, this is Elijan. With regards to your question on guidance, so first of all, we are very confident on our guidance And we feel comfortable with the plan that we have to continue to invest aggressively. One of the things that is important for us to say that While we did very good results in Q2, we are going to continue to invest aggressively in the second half of the year in order to generate additional hyper growth at scale. Just in terms of numbers, our capital efficiency is well above 2.5. Just as a reminder, for every dollar that we invested in Section, we basically generate more than $2,500,000 in terms of ARR. So there is a huge opportunity at the greenfield market. Therefore, we would like to make sure that we don't pass this opportunity and continue to invest. There are going to be additional calls. We're going to continue hiring aggressively in sales and marketing, R and D. We're going to Having the full impact of our new headquarter in Tel Aviv, we're going to continue to invest across other places in the organization. Hopefully, We're going to see some continued growth as we continue to go forward. Does this answer your question, Akash? Absolutely. Great start. Congratulations. Thank you so much. Our next question comes from Mark Murphy with JPMorgan. Hi, good morning. This is Matt Coss. On behalf of Mark Murphy, I'll add my congratulations on the quarter. Can you talk to us about the distribution of new use cases by free packaged solutions versus someone using Monday Build something completely from the ground up and then maybe you can help us understand how many of your Customers who have adopted prepackaged solutions are using sort of the low code, no code advantages of the platform to really customize their application. Sure. Can you this is Arun. Can you just repeat the first part of the question, please? Yes. So if you have a sense of your customers using monday.com, new customers You buy a prepackaged solution versus sort of just using Monday to build their own application from the ground up. Yes. Okay. So this is Arun. So basically, the majority of our customers usually start with one use case and then over time expand to more use cases. I would say the vast majority start with a prepackaged solution just Because usually the way it works is that users search for a very specific problem they're trying to solve and this is kind of how we led them through the onboarding process. But I think the interesting part is that over time, we see 2 trends. 1 is further customizing their existing solution, meaning Matching that to their needs, but then finding more and more product solution that they can use and expanding the usage for the organization and also building their own kind of solutions on their own, their own templates and use cases. In terms of the low code, no code, so basically everybody using Monday essentially is using no code capability. Using the Building the board itself and customizing the columns is essentially, if you think about it, building a database to capture data. And as we disclosed during the IPO process, over 90% of our customers use automation and integration. So it's pretty popular within our enterprise account. So every I would say, broadly speaking, every customer Merck Monday is leveraging our no code and no code capabilities. Okay. Thank you very much. Sure. Our next question comes from Brent Thill with Jefferies. Thank you. I was curious if you could spend a little more time on the enterprise And maybe provide some examples of where you're seeing great traction. I think maybe if you could also talk about your largest deployment And give us a little more color in terms of how that billow is going. Yes. So this is Arun. So we see very high growth in the customers over 50 ks, Over 2 26 percent year over year growth. From our side as a company, this is a strategic part of our business going forward. We do invest heavily into the no touch and bringing new paying customers into our funnel. But at the same time, as we I mentioned in the beginning of the call, we invest heavily into making the product better for enterprise customers, keep adding features and capabilities. And this part of the business is growing significantly faster than the whole of the business. Those customers demonstrate very high net retention numbers, they expand more, and we are keeping and launching new features to that Part of the business going forward. Yes. Hi, it's Rory. I can add that we're in enterprise, we're focusing on Security control features and governance, and that's basically enabling us to get into larger customers. They want it and we need to just open the door right now with enabling all those things and that's where our biggest focus is Great. And I'm just curious if there were any geographic Trends that you're seeing that are different between the U. S, EMEA and APAC, anything stand out? And There's been a lot of questions as it relates to kind of the return to the office as some people have been coming back in. Have you seen any noticeable Differential in customer behavior, obviously, the numbers suggest that it doesn't really matter what environment we're in for you guys right now given the great growth, but any color on that would be helpful. Brent, hi, this is Elijan. So as a reminder, we enjoyed hyper growth before COVID and we expect to continue to grow at hyperscale also post COVID. Hopefully, it will come soon. As a reminder, we see the breakdown, geographical breakdown, 52% of our revenue is outside of the U. S, 48% is in the U. S, 70% of our customers are non tech, and we even added another Polish another language to our platform, which is Polish, now we have 14 languages. So what you see is basically we are expanding within existing customer base in the geographies we already operate in. But as a reminder, we also have our partner channel that in places where we don't have the sales force, we expand within the visibility of our And this helps us to gain additional markets where we don't operate holistically through this genre. Thank you. Our next question comes from Bhavan Suri with William Blair. Hey, guys. Let me echo my congrats. It's a great quarter out of the gate. I guess I want to touch on the enterprise traction. You've added more than 100 customers to the 50 ks plus ARR. I guess I'm trying to understand how much of this do you attribute to the product getting more sophisticated, Its ability to handle complex workflows or do you think it's more driven by the fact that direct sales motion and customer adoption is maturing? Like how would you balance those 2? Yes. Hi, this is Arun. So my short answer will be both. I think we've seen the combination of 2 forces. One is obviously the fact that we Maturing our sales team, we have more sales reps in our company, and they're becoming more experienced. So definitely, this is one part of this effect. The second part is that we invested heavily into the product for enterprise accounts, And we're keeping to do that. So we're doing a lot on that front just to make the product more scalable. And we see As we progress, larger and larger accounts are able to adopt Monday. And another very interesting trend that we see is that Every sales cycle that we close within existing accounts is for another sales cycle. So it's like an never ending Process of finding new use cases, new department that can use Monday, so it's not like a one time deal that you sign off, but more of a process, so therefore we get larger and larger And then I want to touch a little bit on the premium offering. I guess I'd love to understand and you gave some great color, but I'd love to understand what impact have you seen on the top of the funnel because of freemium? And then It makes sense to me that they'll grow, but have you seen any customers downgrade at all saying, hey, I've only got a small handful, maybe over a few minutes. Have you seen that motion at all, the reverse of what we would like to happen. Thank you. Sure. So this is Ron again. So this is very exciting for us. So as we launch this 3 tier, we see that it just adds more customers that use Monday. It didn't hurt or cannibalize our existing conversion to payment in terms of acquiring the customers, but increased the top of the funnel for the company. And we didn't see any impact on our existing customers. So customers are not going to reducing their plans or anything like that. One thing that's super interesting, but again, this is still very early days, but we've now seen a new type of funnel being created of A few accounts that over time, and again, we see early signs of this convert into paying companies. So I think this will increase the exposure of Monday as a tool, what we offer and the amount of people that are exposed to its capabilities and how they can use it. Hi, it's Rory. I would just add that our free tier is now limited to only 2 users, Okay. So it's not really impacting the larger customers. It's just a way to keep on using us and use us for those type of like 2 user plan. Got you. Got you. That's very helpful. Thanks for the color, gentlemen, and congrats again. Thank you. Our next question comes from Brent Barcelino with Piper Sandler. Thank you and good morning or should I say good afternoon. I want to go back to the growth drivers of the business. Growth accelerated here to 94%. You're taking your full year outlook up to 75% growth for the year. I think we were at 60% kind of going into the quarter. So as you look at the just the overall business, What's performing better? It sounds like enterprise is strong, existing customers is strong. Is that the main driver here giving you optimism, just Stronger adoption and expansion than you expected. Is it broad based? Is there a particular region or The business that's outperforming, it just seems like the business here is much stronger. Your optimism is much higher. Trying to understand what the primary kind of rank order drivers here in the business are? Thanks. Hey, Brent. This is Alivang. Basically, I think everything that you said, it's all of the above. So obviously, our growth was Being driven by long term secular tailwinds and momentum in the space in the category. And there is a combination of the following. There is a New customers as we continue to add to our platform, there is obviously an expansion within our existing customer base, high quality, and which can be demonstrated from our net dollar retention rate, which is now over 125%. As a reminder, it was 121% In Q1, and we are also seeing, obviously, the enterprise momentum and the motion of 470 enterprise Accounts up 226% year over year and the indications that we are seeing is basically that it continue to trend up. And I believe that the ease of use of mandate, the fact that we are a market leader, the brand awareness hopefully also supported by the IPO. The third motion that was mentioned by Iran, LOE, we kind of Had the sales organization mid-twenty 18, so now we see the fruits of this investment. So all of the things, the combination of all of these things are creating our optimism with regards to this growth and potentially continuous growth. Great to hear there and appreciate that I guess on the flip side of that, operating losses have narrowed meaningfully in the quarter. It looks like your guidance Suggest that operating losses here could continue to narrow. Is that a function of just not being able to hire as aggressively as you would I know it's a tight labor market right now or is there something structurally more efficient about Your sales and marketing spend, where you feel you can drive this hyper growth without aggressively investing as much as you have in the Just trying to understand why you're kind of narrowing the operating loss here for the second half of the year? Thanks. So as I mentioned earlier, Brent, so we're not trying to optimize cost. Actually, we are going to continue and invest aggressively. But definitely, we see some efficiencies within our sales and marketing investment. But we will continue to invest aggressively. I don't want to think about it as an indicative kind of direction as we are operating in accordance with what we presented in our growth phase model. We are going to see further additional costs, I believe in the second half of the year. As I mentioned, we just moved to the new building. We're going to continue hiring aggressively. Even though there are some challenges retiring, we're still hiring very well and there are going to be salary increases. We're going to have events by the end of the year. So I think there are going to be costs that really are going to be incurred in the second half of the year, but obviously, We're working in accordance with our growth phase operating model. Helpful color. Great to see the momentum of the business. Thank you. Our next question comes from Ittai Kidron with Oppenheimer. Hey, guys. Great quarter. Out of the gate, good stuff. I I wanted to maybe, Rene, around talk about WorkDocs, the announcement you made today. If you could give us a little bit more color? And more interestingly, How does that work its length to your pricing plans? What are the odds that within the next 12, 18 months, you actually raise prices across your plans? Hi, it's Roy. Yes, so that's super exciting, the work docs. So we're essentially We see a lot of starting points for Monday in our Monday boards where it's like a very structured way of information. And the documents essentially allow customers to start with an unstructured way, right? Like you Start something and then usually it stops with like old fashioned docs. With Monday, we saw a massive opportunity with Continuing that work on the platform, adding more people. So we see this as a new way for customers to start using Monday. So the docs, as you asked, are accessible to everyone. We don't want to limit that by pricing tier and those Kind of limitation because we want everyone to start. We will in the future consider adding more And tiers into the documents were like extended functionality, but we don't have that now. And if I can add it, Ty, this is Arun. So Another point that's super interesting, is the combination between Boards and WorkDocs. So the fact that you can embed Into a work dock, a board where you can actually change the board from within the dock, everything is live, you can have several people working together in this It's very intuitively and in real time. It is again, our mood is fire In terms of those 2 and vice versa, you can have a dock within the board. So combining those two products together, I think will generate a very saying ways that our customers can leverage the power of both. Great. Maybe as a follow-up, If you could update us on right now when you how big is your largest deployment? How many seats are in your largest deployment? Currently Ittai, this is Ivan. Currently, it's 7,000 seats. This is a customer that we have. This is the biggest Sounds currently happening. Got it. Excellent. Gustav, thanks. Our next question comes from DJ Hynes with Canaccord. Hey, guys. Great start here. Thanks for taking the questions. Just one for me. I'll direct it at Eran, but anyone feel free. I was hoping you could talk a little bit about coexistence with other work management tools in your large enterprise accounts, right? I mean, I look at Fortune 500 penetration for guys like Smartsheet, Asana, yourselves, I mean, there's clearly overlap there. So hoping you could talk about how you see this playing out? Will there always be room for multiple vendors in these large accounts or do you think they consolidate around a single vendor over time and how do you position Monday to be that vendor? Yes. Thanks, Vijay. It's Iran. So it's a great question. Overall, mai.com is a work OS. So essentially, there's a lot of things that could build within Monday, but one of the key things that was super important for us being at WorkOS is to integrate really well with other tools. So essentially our goal is not to replace all tools within the organization, but to be a place where people can build stuff and manage a lot of The core functionality within Monday, but any app that's organization already used can be integrated into Monday. Data can be presented within one day, you can change things and data can be synced back into a third party application. So essentially, kind of our philosophy It's to work well with everybody. We're not trying to replace everything within organizations. So I don't think it's a point of consolidation, but where we Likely positioned in a way that we're kind of the work of the organization, the backbone that connects everything within organization, if it makes sense. Perfect. Thank you guys. You guys on the start. Thank you. Our next question comes from Derrick Wood with Cowen and Company. Great. Thanks for taking my questions and congratulations on my end as well. Maybe first one for El Aron. The enterprise net revenue retention rate you mentioned was 1.25%, up from 1.21% last quarter. Could you kind of unpack how much has come from improvements in gross retention and how much is from stronger expansion trends? And then speaking about expansion, I mean project management is a core area for you, but we get a lot of questions from investors kind of what are the next most popular 2 or 3 use cases and what's growing the fastest. So if you could comment on that as well, that would be helpful. Definitely. So this is Eliran. On the question with regard to use cases, I will defer later to Roy or Eliran, but let me start with the net dollar retention rate. So as a reminder, the core focus for our business is customers with 10 plus users. They include enterprise accounts and accounts that are less than $1,000 What we see is basically a strong expansion within this existing customer base. And as a kind of a proxy to this expansion, if you think about the recent cohorts, So when we are looking at our cohorts, the recent cohorts and this is something that we shared historically, we see that the customers that we have are landing At bigger accounts, so they have a larger ARR in our retention. And because the net dollar Attention calculation is trailing 4 quarters, weighted average trailing 4 quarters. What you see is basically it's catching up. So the impact of these cohorts, which are getting much better, are impacting the net dollar retention. This is the result that you see in our net dollar retention basically getting to 125% and obviously also impacted By our expansion within enterprise accounts, with regards to use cases, is this okay Vijay? I mean, this is Before I defer to Roy? Yes, perfect. So Roy, I will defer to you on the use case. Yes. So I would appreciate if you can repeat the question. Yes. I was just we get questions Investors on kind of what are the most popular 2 or 3 use cases outside of Core project management in terms of where you guys are seeing kind of most traction. I know there's a lot of different fronts that you guys Compete and offer, but if you had top 2 or 3, that'd be helpful. Yes. So that's great. So I would say one more that is CRM for like smaller use cases up to mid Size use cases, we see that as a big trend for us. And also, We have a lot of customers that build their own use case, so they might manage. We have Customers from over 190 different business verticals, so they do And they build their own tools to run those processes. So whatever that might be, and that's It's more in the workflow process management kind of space. Okay. Thanks for the color. Thank you. Our next question comes from Scott Berg with Needham. Hi, everyone. I also echo my congratulations I guess the first question is, and I don't know who wants to take it, but is on The work docs and that's specifically the product, but just how you think about pricing more in general going forward? Today, you released the functionality or you Talked about functionality being included in the base price, but do you ever get to a situation maybe over the next couple of years where you kind of modularize or componentize some of that functionality and sell that as an upsell premium tier versus an all in all you can eat today scenario? Yes. So thanks, Scott, for your question. This is Ivan. So it's a great question. When we launched WorkDogs today, Our thinking that we want this to be available in our all pricing plans because The idea was that anything that can drive usage and have more people in the organization that can use Monday makes sense to be available in all times because essentially we want to get everybody on board. In regards to kind of future thoughts in terms of further pricing and packaging, so definitely The way that we think about kind of future pricing is around packaging, in terms of different product solutions that we offer. So in different industries, we have different pricing levels. For example, in CRM, we can charge more per user in other industries as well. So Our thinking going forward is to package the product more significantly for those product solutions and then we can have differentiated pricing and perhaps different tiers for those product solutions. So definitely going forward, it's in our roadmap. Understood. Quite helpful. And then from a follow-up perspective, you all had mentioned Partners a couple of different times during your script. As we've had a chance to speak with different partners that you're currently starting to engage with, it's So very early in that life cycle. But how should we think about partners contributing to the monday.combusiness Maybe over the next 2 to 3, 4 years, do they become a substantial part of your go to market sales strategy or will there always be and maybe have a smaller kind of an ancillary opportunity there. Thank you. Great. So it's So yes, the partners is a big part of our roadmap going forward. So first of all, like you mentioned, it is Helping us with global expansion and places we don't have the sales team on, but also they are we're working with a lot of them Together to offer solutions for larger companies, larger enterprises that want to tailor make the platform connect To other staff, they help us a lot with professional services and many of them also are large contributors to our marketplace. They develop apps and a lot of stuff people across the platform use. So it's a very we have like varied partnerships. Obviously, Not everyone are the same, but as a whole, the partnership is like a big part of our vision going forward. Thank you. Our last question comes from Andrew Kasperi with Berenberg. Thanks for taking my question and congrats on going public. First, I guess, I wanted to ask A follow-up on the competition question. I know that a lot of other work management tools are also chasing the larger end of the market or the enterprise customer. So I was just wondering if any of these bids are competitive that you're seeing right now or are they mostly greenfield? Yes. So thanks, Edward. This is Aran. So from anything that we see, this is a huge greenfield opportunity for us This is something we will be closed as part of the IPO. On 70% of the deals, we see literally no competition. Usually, customers use email and spread and PowerPoint and email to communicate and collaborate, and it just seems that everybody Are trying to improve how they work and make it more efficient. So definitely feel like a greenfield. On 30% of the deals, we see, I would say more of a vertical competition. So if somebody used Monday for CRM, for example, we might compete with SMB focused CRMs. If somebody is using project management, we might see other competitors in the project management space. But broadly speaking, this is A huge greenfield and there's a huge opportunity to grow within this market. That's helpful. And just as a follow-up, These other solutions, the CRM, the software development, the HR, seems pretty unique relative to your competitors and it seems to also, I guess expanded to other end markets that there's some bigger players in like Atlassian and Salesforce. So I was just wondering, Are you really just focused on that smaller end of the market with these tools and you don't really see these other larger Software companies in that field or those fields? It's So that's a really great question because it's we see a lot of those Vertica is a go to market for us, like we want to put the food in the door and get into companies. And as we scale, We are partnering and integrating into those larger players as you mentioned, meaning that we see ourselves as unifying the Workspace like creating unified workspace for companies with no code, low code capabilities and the integrations that really connect All the tools you mentioned to the rest of the organization and allowing them to create more workflows with them, if they want to replace, Fine, but usually like the bigger pain points are connecting, breaking silos, having people work together. So it's a two way go to market that we land on the smaller use cases and even the small size CRM. And we have a lot of large enterprises that start with a small one on different stuff that they use. So it's a great foot in the door for our season for enterprises And then we integrate with the larger players. Great. Thank you. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.