monday.com Ltd.

Thank you for standing by. I would like to welcome everyone to the Monday.com second quarter fiscal year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star and the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. I would now like to turn the call over to Byron Stevens, Vice President of Investor Relations. Please go ahead.

Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for Monday.com's second quarter fiscal year 2024. Joining me today are Roy Mann and Aaron Zimmern, co-CEOs of Monday.com, and Elron Glazer, Monday.com's CFO. We released our results for the second quarter fiscal 2024 earlier today. You can find our quarterly shareholder letter along with our investor presentation and a replay of today's webcast under the news and events section of our IR website at ir.monday.com. Certain statements made on the call today will be forward-looking statements, which reflect management's best judgment based on currently available information. These statements involve risk 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 will be discussed on the call. Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our investor relations website. Now, let me turn the call over to Roy.

Thank you, Byron, and thank you everyone for joining us today. Since our debut in NASDAQ three years ago, we have made significant progress in realizing our vision of becoming the platform to run the core of all work for customers. In that time, we have transitioned from a single product offering to a true platform with multiple products. This transition and our strong execution have allowed us to nearly double our customer base, triple annual recurring revenue, and increase our largest customer seat count tenfold. Our impressive growth trajectory aside, Monday.com's unique strength lies in our ability to achieve this expansion while driving operational efficiency. This quarter, we achieved a record non-gap operating profit and notably attained gap operating profitability for the first time in the company's history. Our investment in the enterprise go-to-market and platform infrastructure through MondayDB continued to yield promising results. In December 2023, we announced a significant increase in our largest seat count, growing over threefold to 25,000. This quarter, we are pleased to announce another significant milestone. Our largest seat count has more than tripled once again to reach 80,000 seats. Beginning with the finance and product teams to address multiple use cases, this multinational healthcare company rapidly extended its Monday usage to encompass additional teams within the organization. Impressed by our WorkOS's ease of use and customization capabilities, the company made a strategic decision in Q2 to expand Monday work management across the entire organization to address all work and project management needs. Let me now turn it over to Iran to walk you through some of our product highlights for the quarter.

Thank you, Roy. Our efforts to enhance our underlying architecture with MondayDB remains on schedule and reach another exciting milestone in Q2 with the launch of MondayDB 2.0. MondayDB 2.0 will elevate scalability, enabling customers to manage boards with up to 100,000 items and linked items, and dashboards with up to 500,000 items, significantly advancing their work capabilities. AI continues to be a top priority, and we are actively integrating it across all areas of Monday. In mid-2023, we deployed a third-party GN AI chatbot for managing chat-based customer service tickets, yielding impressive results. The chatbot has resolved around 50% of customer service tickets automatically. The initial success had led to a significant increase in chat ticket volume and reduced our reliance on external support for ticket management, as customers benefit from the chatbot quick and accurate responses. We expect this trend to continue through 2025 and beyond, as GenAI further enhances our efficiency in meeting customer needs. Additionally, we are leveraging GenAI to improve the user experience through advanced automation and text management collaboration. In Q2, we introduced the new GenAI features to the Monday platform, including auto-generated action items, thread summaries, and enhanced text extraction capabilities. We continue to make significant progress in enhancing and expanding our product suite. Monday CRM has been a major success, and it continues to exceed expectations, expanding to over 20,000 accounts since its launch in 2022. In Q2, we introduced several new features, including email engagement tracking and timeline reminders to further enhance its functionality. For Monday Work Management, we are focused on addressing the needs of larger accounts. In Q2, we launched our portfolio solution for enterprise work management, which has already shown strong initial adoption. Monday Dev continued to resonate with customers by offering a comprehensive suite of tools for managing the entire development process. This quarter, we introduced a roadmap tracker, which enables users to visualize company epics, track progress, and focus on key commitments. And finally, our latest product, Monday Service, is now on beta and is scheduled for full release by the end of 2024. We remain highly enthusiastic about its potential. In closing, we are less than a month away from the kickoff of our annual conference, Elevate. Elevate is a must-attend event for Money.com passionate customers and anyone excited about work tech. This year's Elevate will take place in London, New York City, and Sydney over the coming months. Please join us live or online as we will share our vision, strategy, and product roadmap, allowing you to gain deeper insights into our product and future plans. With that, I'll now turn it over to Eliran to cover our financials and guidance.

Thank you, Iran, and thank you to everyone for joining our call. Before I walk you through our second quarter results in detail, let me first give you a brief update on pricing. Our new pricing structure that was introduced in Q1 24 continues to yield positive results and has now been extended to approximately 40% of our customer base. We maintain our forecast of a 25 million in revenue benefit from this new pricing structure for fiscal year 24, which project a total revenue benefit of 75 to 80 million from fiscal year 24 to fiscal year 26. We delivered strong results in Q2, marked by robust revenue growth and enhanced profitability. These results highlight our effective execution and the strong demand of our work operating system products across companies of all sizes. Total revenue in Q2-24 came in at $236.1 million, up 34% from the year-ago quarter. Our overall net dollar retention rate was stable in Q2-24 at 110%, reflecting the recent pricing updates and strong demand for our work operating system products. we continue to anticipate reported NDR to remain stable throughout fiscal year 24, with an expected small improvement by the end of the year. As a reminder, our NDR is trailing four-quarter weighted average calculation. For the reminder of the financial metrics disclosed, unless otherwise noted, I will be referencing non-GAAP financial measures. We have provided a reconciliation of gap to non-gap financial in our earnings release. Second quarter gross margin was 91%. In the medium to long term, we continue to expect gross margin to remain in the high 80s range. Research and development expense was $36.9 million in Q2-24, or 16% of revenue compared to 16% in Q2-23. Sales and marketing expense was 120.7 million in Q2-24 or 51% of revenue compared to 56% in Q2-23 G&A expense was 18.2 million in Q2-24 or 8% of revenue compared to 8% of revenue in Q2-23 Net income was 49.3 million in Q2-24 up from 21 million in Q2-23 Diluted net income per share was $0.94 in Q2-24, based on 52.2 million fully diluted shares outstanding. Total employee headcount was 2,110 employees, an increase of 122 employees since Q1-24. We expect to ramp throughout fiscal year 24, with a continued focus on our R&D, product, and sales team as we build out our platform and product suite. Moving on to the balance sheet and cash flow, We ended the quarter with $1.3 billion in cash and cash equivalents, up from $1.1 billion at the end of Q4-23. In Q2-24, free cash flow was $50.8 million and free cash flow margin, as defined as free cash flow as a percentage of revenue, was 22%. Free cash flow is defined as net cash from operating activities, less cash used for property and equipment, and capitalized software costs. Now let's turn to our updated outlook for fiscal year 2024. For the third quarter of fiscal year 2024, we expect our revenue to be in the range of $243 million to $247 million, representing growth of 28% to 31% year over year. We expect non-GAAP operating income of 19 million to 23 million and an operating margin of 8% to 9%. We expect free cash flow of 70 million to 74 million and free cash flow margin of 29% to 30%. For the full year 2024, we expect revenue to be in the range of 956 million to 961 million, representing growth of 31% to 32% year-over-year. We expect full year non-GAAP operating income of $100 million to $105 million and an operating margin of 10% to 11%. We expect full year free cash flow of $270 million to $275 million and free cash flow margin of 28% to 29%. Let me now turn it over to the operator for your questions. Thank you.

As a reminder, if you'd like to ask a question, please press star and the number 1 on your telephone keypad. We'd also like to ask you to please kindly limit yourself to one question and one follow-up. Thank you. With that, we will begin the question and answer session. And your first question comes from the line of Brent Brason from Piper Sandler.

Good morning.

Good morning and thank you for taking the question here. I wanted to touch base on the large customer cohort. You added a record number of 100K customers this quarter from a net ad perspective. The net expansion metrics actually improved here despite some macro headwinds. Can you just talk through what seems to be resonating in this environment that's still challenged with those larger customers, why they're turning to Monday? It would be super helpful. Thanks.

Yeah, Brent. Hi, this is Aran. So, yeah, we continue to see strong traction in our larger accounts. A lot of them are just accounts we already had on the platform that continue to expand and grow and increase the number of users. Some of it is software consolidation, but a lot of it is just natural growth and more usage of Monday within their own company. So that's continued to trend and looks really healthy, even given the environment right now. So that's basically what contributed to the increase in the $50K and $100K and also their NDR.

Helpful color there as a follow-up, Eloron. I know you talked about kind of trying to still wanting to reinvest in the business. Op margins came in here better than expected in the quarter. Is that improvement tied to some of those customer support cost savings that you referenced using JetAI, or are there other factors that contribute to margin outperformance here in the first half?

Hey, Brent. It's Elian. Sure. I would say some of it related to the fact that we are using Gen AI and customer success, so we don't need as amount of people like we used to in the past. In addition to that, you know, we're always speaking about efficient growth. So on one hand, while we are behind on hiring this quarter, you know, we have some ambitious plan on hiring as well as, you know, our spend on the performance marketing that is related to the big brain system that we have. then this is something that we always monitor. But as part of our efficient growth, we kind of look at our cost as well, not only on the top line, and this is the result of some of the things that I mentioned.

Fantastic. Phenomenal results, guys. Thanks for the color.

Thank you. Your next question comes from the line of Jackson Ader from KeyBank Capital Market. The line is open.

Thanks for taking our questions, guys. First one is on usage and utilization, maybe between the different customer segments. So what does utilization look like for your down-the-middle, small and medium-sized business customer versus maybe some of your largest customers? It doesn't have to be the 80,000th seed, but like the large customers versus SMB utilization.

Hi, this is Roy. So you mean utilization in terms of like their seat count versus their usage of it or use cases?

Yeah. Yeah. Like, you know, you've got a hundred people and 70 of them really use it every day. And, you know, I don't know, 30 kind of check in every once in a while, like utilization of the product, meaning like how often they're using it. And I guess like if there's any measure of depth to how they're using it as well.

Yeah, so we have a lot of different measurements, obviously, and we see ourselves as a core tool. We go after core use cases, meaning it manages the core of work, and we see really high engagement across our customer base. Having said that, being part of the flywheel motion, what we see is that you have a team using a core use case which runs really the core of what they do, and then they invite other people that are helping them or connecting to them. And the flywheel motion means that over time, they will start creating their own core use case, and then we scale there. So we have two tiers, if you like, of types of customers, the one who are like in the main use case and the one who are kind of like more invited and part of others' workflows. And that's how we grow over time.

Okay. All right, great. And then actually staying kind of on the product side, for MondayDB, can you guys just put the scalability in context? 100,000 items on a board, 500,000 on a dashboard sounds like a lot, but can you compare that maybe to – what those statistics look like under Monday DB 1.0 and then maybe even prior to Monday DB being rolled out last year?

Yeah, Jackson, this is Iran. So compared to Monday DB 1.0, that's a 10x from the limits we had before in the prior version. And the number of items will continue to scale in future releases. So it is a significant growth, both in terms of boards and dashboards. And in future releases, we're going to have another kind of significant steps in terms of scale of what the boards can contain.

Okay. Awesome.

That's helpful. Thank you.

Thank you. Your next question comes from the line of Alex Zukin from Wolf Research. The line is open. Hey, guys.

Thanks for taking my question and congrats. Maybe just help us, give us a flavor for kind of the demand environment, the linearity of the quarter, and particularly the large deal cadence, which was, again, quite extraordinary. Maybe how did it compare to last quarter? How did it compare to your expectations and how to think through, again, this kind of macro, dicey macro environment that we seem to be in for this year?

Sure. Hey, Alex, this is Eliran. So with regards to demand, a few things that I would like to highlight. So SMB, the strength of Monday, and it continues to perform very well. In terms of what we see, demand environment in general, in terms of macro, is inconsistent and choppy. We also saw it from other companies that mentioned it. But the fact that despite persistent macro challenges, we see the demand steady across all segments. This is something that is very encouraging for us. And in addition to that, maybe to provide the KPI to demonstrate the strength is our growth retention is at record levels. But, you know, but we're still seeing some cautious spend environment with many other customers. So all in all, pretty consistent with what we saw in the past. It's not getting any better, but it's not getting any worse. And we maintain our strength in, you know, SMBs and across all segments.

Yeah, and maybe I have to... Sorry.

Yeah, go ahead.

No, just you also asked about the large deal that we closed. So maybe this is Iran. So maybe just to give you some more color on this, it's a European-based multinational healthcare company. They were actually an existing customer of Monday since I think about 2020, four years now. They started, the first use case was mostly focused on finance and R&D, managed workflows and projects. And then we expanded. Now it's being used across procurement, design, internal ticketing management. And basically last year, kind of end of last year, but close now, they made the decision to consolidate on Monday and kind of basically standardized the whole company on the platform. So that's the largest account, but it's a very healthy expansion and long kind of use case over the years and happy partners of them since 2020.

Perfect. And maybe just as a follow-up, on the CRM sales net customer ads going forward, it's been about 4,000 now a quarter of the past two. Is this the right way to think about it going forward? And given the launch of DBT, of the 2.0 version of MondayDB. Is it fair to think that we should start to see that ASRPC go a little higher on the sales side as well?

I think this is Ron again. So I think it's a fair assessment to say that's going to be the pace. Most of the growth is still coming from existing users, so it's less of a case of MoneyDB making a huge impact on the numbers. It's mostly customer acquisition of new customers that kind of generate and kind of help this number grow.

Yeah, and if we're talking about the CRM product, like we see nice growth and we're always going up market and improving our capabilities So we do expect us to be able to get a bigger ACV, let's say, for CRM.

Perfect. Thank you, guys. Congrats again.

Thank you. Our next question comes from the line of Arjun Bhatia from William Blair. The line is open.

Perfect. Thank you, and congrats, guys, on the strong quarter here. I wanted to ask about the service management product build-out. It seems like you're in full beta with that, and maybe now you have a little bit of a better idea of what it looks like at launch. So what is your sense of how that product will differentiate versus competitive products in the market now that you have some feedback from customers, and how quickly it might scale and get adoption out of the gates compared to some of the other solutions you've launched like CRM and Dove?

Yeah, thanks Arjun. This is Arun. So first of all, we launched Monday Service now in beta. We already have a few dozens of customers using it and paying for the product. Look, it's very early days to say, you know, compared to how this will compare to Monday CRM or Monday Dev. What we can share that the feedback is very positive from customers, a lot of excitement. One of the things that really resonates compared to other players in the market, again, is the flexibility, kind of similar to the CRM and dev products. But I think specifically for service, it kind of, you know, the effect of this has even more significance to our customers because they want to automate a lot of the processes within the IT service management product, and they want to have more customability on how they capture data and how they process workflows. So this is exactly where Monday shines. The feedback is very positive. People want to use this in addition to other products they're already using with Monday. So it looks very promising. But again, early days, we're going to have a full release towards the end of the year, and then we'll get more traction and we'll be able to share more numbers.

Okay, perfect. That's helpful. And then I think you had talked about in the shareholder letter the work management portfolio product, right? can you just expand on what that product does a little bit, how customers would use it in conjunction with the core work management solution, why it's important for enterprises and then on the economics side of the equation, how do you price a solution like this and how should we think about the upsell? Sorry, a lot of questions in there, but you get the, I think the gist of it.

Yeah, sure. Hi, it's Rory here. So, portfolio management is essentially a way to manage like a thousand projects let's say a lot of projects together so until now Monday was amazing at managing really complex projects with different workflows across the organization and this is a step up for us in terms of the volume of projects even super complex ones but giving a high level overview and management of massive projects, even to management. And essentially it's a building block for us towards managing massive organizations, complete project portfolio and its entire hierarchy. And so this allows us essentially to go up market, to have larger customers depend on us and like really manage the core of of their entire project operations.

Okay, perfect. Thank you.

Thank you. Our next question comes from the line of Ryan McWilliams from Barclays. The line is open.

Hey, guys. Thanks for taking the question.

I thought it was interesting how you noted you added Gen AI to your customer service efforts, and while interactions doubled, you were still able to reduce 30% of your external customer service account. Any learnings here as it relates to the upcoming launch of your Monday service product?

Can I repeat the last part of the question about the... Yeah, just like how did this...

Yeah, how did this customer service experience with Gen AI relate to your upcoming launch of Monday service? Like, anything you could bring over to the new product?

Yeah, yeah, thanks for answering. Yeah, it's completely separate. So, basically, we kind of built and used some third-party tools to automate some of our external customer support. That means supporting our own customers. And that's regardless of building Monday service. In regards to Mindless Service, definitely we're going to have AI capabilities within the product, and it's a good experience for us to kind of experiment on ourselves and saving costs and seeing the benefit of that. But that's going to be kind of more of a future release of that product. The initial version of Mindless Service won't have a lot of AI capabilities in the first version, but Later on, we're going to release future versions with more AI capabilities. But definitely a good experience for us and definitely a huge cost saver for us as a company.

I appreciate that, Keller. And then just on the pricing impact, how are customer conversations been so far around contract renewal? Like, are you capturing the pricing benefit you expected? And then how can we think about the contribution to net retention from pricing this year? Next.

Hey, Ryan, it's Eliran. So just by way of a reminder, we're on target and consistent with what we communicated in Q1. New pricing structure already rolled out to 40% of the customers. So this is stage, obviously, we said that it's going to be until the H1 of next year because this is a rolling forecast. This is a rolling process of 12 months. So all in all, conversations are going well. With regards to enterprise accounts, obviously, because they are big accounts, there is some negotiation in the way we kind of increase prices. But all in all, reaction is good and continue to evolve this.

Thank you. All right. Thank you. Our next question comes from the line of Derek Wood from TD Cohen. The line is open.

Great. Thanks, Al. I'll come back. Congratulations. As you're driving some of the strongest growth in the SaaS market from a competitive standpoint, Would you say that win rates against core competitors have gone up, or would you say you're tapping into new budgets you've never been in before and kind of competing against different vendors? Just wondering how you'd talk about the strength of your competitive positioning.

Hi, it's Roy here. So for one, I feel like we're still doing super strong on the performance marketing end because we have great visibilities into the return market. of all our campaigns, we know where to put the money and see the returns. And I think that's something we can do way better. And we still gain a larger share of the market because of that on the new side. On the other hand, I can tell you we're still treating this as a greenfield space. We see most of our deals were not up against competitors, but in some areas we do. And where we win, we win a lot because of the platform and our capabilities and the fact that companies see they can rely on us in the future as well as in a lot of other things they can do. So yeah, so on all fronts, we see our position as positive competitively.

Great. And maybe just to touch on that Greenfield aspect, I mean, we've heard that your new AI-powered templates are really helping to drive greater user adoption and just make it a lot easier to spin up new use cases on the platform. Can you talk about how your new AI technology is helping drive higher adoption and maybe expansion rates?

Hi. So it's still early days to know the exact impact of it. We see great positive feedback from customers using it. And it is, like you said, it's a lot of power because we built it on top of the platform. It's totally integrated into it in a way that you can build whatever you want. Like we showcased in the a demo we did in Investor Day. Essentially, you can build any AI work, integrate AI into any workflow you want, and it's super powerful, and we see people building great things with it. And going into the future, we expect great things from this.

Awesome. Thank you.

Thank you. Our next question comes from the line of from JP Morgan. The line is open.

Great. Hey, thank you for taking the questions and congrats on a solid quarter here. One question on guidance slash macro, I guess. It seems like you're raising the full year guide by more than the Q2 beat and you're not raising the pricing benefit for the year. So trying to understand what gives you confidence in this macro to essentially raise the core guide. Is that largely the large deal dynamics that you're seeing? Is that mainly because of the gross retention improving? Any color helps?

Yeah. Hi, Pinjalim. It's Eliran. So as you know, first of all, we didn't adjust our pricing estimates since Q1 earnings. So it remains at $25 million. for the year, fiscal year 24. And just as a reminder, by fiscal year 26, we're looking at around $75 to $80 million. We, you know, we follow the same playbook that we always do based on what we know today, based on the, you know, the data that we have, the sentiment. We obviously account for the sentiment in the market. We provide our guidance. Nothing has changed in terms of philosophy, but we do encourage by the fact that, you know, Topofanel is still very healthy. The fact that we achieved a large customer that is proving our use cases is becoming more perceived by our customers. So all of the above, in accordance with what we know today, provide us with the confidence that we can achieve the numbers that we provided as guidance.

Got it. Very helpful. Thank you. And one follow-up. Maybe talk about the pricing environment in general in this market. One of your competitors lowered prices while almost everyone seems like raised prices. Do you see any pressure in the pricing dynamics in the market, especially among the enterprise customers? Or do you think people are looking beyond list prices for Monday and kind of focusing on ROI? Yeah. Evan, you want to?

Yeah, I can take it. Yeah. So, look, the price increase reception went really well from our customers, specifically in the enterprise segment, very receptive. Again, it's literally the first time we've raised prices for existing customers. So, given all the value that we added to the platform, they received really well. I would say that in the A-B test that we've done before and also we see now, it has some a little bit of impact on customers that are, you know, very, very small businesses. I mean, individual users or companies of two or three people. So that might impact the total customer count. But we anticipated this and we kind of planned that this will happen. And we think that, you know, it kind of correlates with our focus to go up market and focus on teams and kind of larger mid-market and enterprise customers. That's pretty much in line. But apart from that, we see no impact on our existing customer base and definitely not the enterprise segment.

Got it. Thank you very much.

Thank you. Our next question comes from the line of Catherine Ng from Goldman Sachs. The line is open.

Hi, it's for Cass. Thank you for taking the question. You highlighted impressive internal metrics regarding the implementation of GenAI services, while also mentioning the rollout of new functionality to customers on the platform. How is the success you have seen over the last few quarters shaping your view on this technology and how it's going to be incorporated both in the broader software ecosystem and Monday in particular? I'm curious to hear how you're thinking about this in terms of its ability to maybe change customers' propensity to pay or the need for the number of subscriptions customers opt into? And I have a follow-up.

Yeah, sure, I agree. So, yeah, look, definitely the technology is real, and we've already seen some great benefits from adding features. I think so far we mostly were focused on adding platform capabilities in terms of AI, meaning allowing our customers the same flexibility and and allow them to integrate AI workflows into their existing work. Kind of the next phase for us right now is to add AI capabilities into our product suite. So add specific AI features to CRM. Obviously, Monday's service is going to benefit from AI features. So right now, our kind of future focus is adding more AI capabilities to the products themselves. But again, we're working on both fronts, and You know, the feedback is good. It takes time for people to adopt those features, definitely. But the ones that do, we hear great feedback.

Yeah, maybe to follow up, Gilead, to your questions on customers. I think that the big question with AI is always about monetization. So obviously we saw that the infrastructure companies, as well as the hardware, are benefiting from the fact that there is, you know, an AI kind of boom. But I think, you know, we are now focusing on, as Eran said, adding value to To monitor this, we will have a few options in the future, either as part of an add-on or to add it as a feature or functionality to our existing solutions. But nothing, I mean, we didn't account for this this year. I think in this year, we are looking mostly at the development and the contribution to retention and adoption of the platform by our customers.

Perfect, thanks. And how is the adoption curve of CRM and dev shaping your view on pricing and go-to-market more broadly, particularly as you look to the GA of Monday service and future products? Should we expect this to follow the same curve in the sense that it will be released to new customers before existing, or are you guys taking a different approach?

We're using the same approach. As I said, monetization will come later. You know, maybe it will be, not maybe, it will be part of the total offering, but in terms of changing the pricing due to AI, it's still early days, and I think not now.

Yeah, but I think maybe you specifically asked about mindless service rollout. So specifically about that, we're probably going to follow the same path. That means go to market with a new product. But again, judging from what we've already seen in terms of demand from our own conservators, I think there's also going to be a strong cross-sell opportunity there with Monday service. So, again, it's a very early day, so it's really hard to determine. But in terms of people searching for such products online and also our own customer base, I think we're going to benefit from both.

Perfect. Thanks.

Thank you. Our next question comes from the line of Michael Baird from Wells Fargo. The line's open.

Hi, congrats on the quarter, and thanks for taking my question. I want to touch on cash flow for a second. It looked like cash flow in the quarter wasn't quite as robust as operating margins, but the implied rest of your outlook looks incredibly strong, in particular in Q3, but Q4 remains a little bit low implied. Anything to point to on seasonality or timing of free cash flow and maybe how to think about that beyond this year? And I have a follow-up. Thank you.

Yeah, sure. So with regards to free cash flow, we mentioned in the past that there is some seasonality. For example, in Q2, this is the month or the quarter where you pay the salary increases or you pay commission for the salespeople, vacation days, and all of the above. So this is something that is usually traditionally more expensive in terms of free cash flow. Q3 and Q4, I would say there is some seasonality mostly related to the fact that there are sometimes one-time events. But other than that, with the exception of Q2, which is more seasonality-wise, and some Q4 that we pay some commission for the salespeople, this is basically the behavior of the free cash flow. I would mention one thing that is part of our moving to new offices in London, we get the benefit of $11 million cash incentive related from the prior landlord. So this is something that obviously we took into account as part of our annual estimate. So this is something that I would say it's a one-off, $11 million that we are getting. But all in all, we see the fact that basically operating profit and free cash flow are getting more closer in terms of the numbers, percentage-wise.

Helpful. So to be clear, the $10 million of the incremental free cash flow raise was from the incentives, and then does that also explain the pickup in CapEx?

Yeah, yeah. Pickup in CapEx is related to the fact that, you know, as we grow in terms of number of people, we added 123 people and we exceeded 2,100 employees. Yes, we invest in offices to accommodate for all these people. So this is the increase in CapEx.

Helpful. And then a quick follow-up. So with service coming out later this year, you had three strong new products come over the past, we'll call it 18, 24 months. Nothing's been announced beyond that. So how can we think about new products or how you're thinking about new products or areas to focus on beyond service from here?

Yeah, this is Aran. So right now we don't expect to add new products in the, I would say, you know, coming future, we're pretty much focused on going deep for each one. That means we're going to focus on CRM, dev, work management, obviously, and service. And going deep means adding more functionality. Maybe we're going to have, like, subproducts within those kind of mini product suites, but we're not going to open more product lines in the upcoming future.

Thank you. Our next question comes from the line of Michael Funk from Bank of America. The line is open.

Great. Thank you for the question this morning. I think you briefly mentioned earlier that part of what you're seeing is consolidation, a small part of your growth, but still seeing it. Anything to call out on, you know, your product advantage or reason customers are consulting on to Monday or maybe why they're moving away from competitor products?

Yeah. Hi, Mike. This is Ron. I think the main reason what we've seen, again, it's not huge numbers, but, you know, it's definitely a little bit growing. The customer consulted on Monday mainly because it can do many things because of its flexibility. I think where other products, you know, don't have this ability is where they're kind of built for one purpose, and then if you want to add more use cases or want to kind of consolidate other products, it's almost impossible technically to do it. And with Monday, a lot of our customers managed to do it and kind of consolidate different products they're using into the platform. So just with the nature of the flexibility, it allows our customers to do more and more of that consolidation.

Thank you for that. And to comment on the macro, I know you mentioned you're seeing some macro impact, but an interesting quarter with some other software companies, you know, highlighting a real slowdown end of quarter in demand. So, you know, love to hear your thoughts and maybe why you're seeing less macro impact. And then, you know, if there's been any shift in, you know, in incentives, you know, Salesforce compensation that you've implemented to maybe address some of the weak macro impacts.

Hey, Mike, it's Eliran. So maybe as we said earlier, the demand environment in general is still a bit inconsistent and choppy. But for us, we emphasize in the past, so despite the macro challenges, we see a steady demand across all segments. SMB is an area of strength to us, but also mid-market and enterprise continue to grow in a very nice way. So it's not related to the fact that we implemented the new compensation. This is very early days of this implementation, but hopefully over time we are going to see the benefits of that as we continue to kind of segregate between segments and the way we compensate the salespeople for each segment. I would say it's also related to the fact that our growth retention is at record levels. Although we see cautious spend environment, We're encouraged by the fact that customers are unlocking the value of Monday platform as we continue to add more value and more features and functionalities.

Great. Thank you for the time.

Sure. Thank you. Our next question comes from the line of DJ Hunt from Canaccord Genuity. Your line is open.

Hey, guys. Congrats on a nice quarter here. Good to see the results. Uh, just one for me, Iran, I want to ask you a high level question around R and D spend. I mean, you guys clearly continue to innovate quickly, but when I look at your business compared to say somebody like Atlassian, right, which maybe they're not the best comp given the unique P and L, but you guys spend quite a bit less on R and D. Can you just talk about that product development efficiency, what drives it and how we should think about trends in R and D spend over time?

Uh, yeah. Hi DJ. It's Iran. So, uh, Look, unfortunately from my own experience, spending more on R&D doesn't always correlate with more execution. So I wish this was the case, but being efficient in terms of R&D, developers, product and designers has always been a goal of us and it's very important for us. Often what we found is sometimes having less people on the team makes the team more efficient as opposed to having a lot of people on the team. And, you know, you've seen our execution over the years. We always believe in, you know, high velocity execution. We drive to make an impact with our product teams and giving them a lot of ownership. So we're very proud in how we manage our R&D team and execution. In terms of the percentage of spend, it might go up a little bit in terms of the Maybe Eliran can add more calls on this, but we're keen to keep our efficiency, and even more than that, we're keen to continue and execute as we scale the company.

Yeah. Hi, it's Eliran. Maybe, DJ, just to add that, you know, in terms of R&D, we always want to hire. This is the number one priority of hiring, bringing resources to Monday. But, you know, the flip side of it, if you compare this to Atlassian, there is always, like, if you look at S&M, And R&D, I would look at them together because it's also important to understand the other divisions as well. So, SMO, we're able to reduce, you know, cost percentage of revenue. In the case of other companies, sometimes it can be the other way around. So, you know, I think that all in all, investment in R&D is the top priority of us, and we continue to be efficient, but definitely this is something that we would like to highlight.

Yeah, yeah, all makes sense. Helpful caller. Thank you, guys.

Thank you. Our next question comes from the line of Steve Enders from Citibank. The line is open.

Okay, great. Thanks for taking the questions here. I guess maybe just to start, I want to ask about the, I guess, annual customers coming up for renewal and the impact of the price increases. are having into that base. Is there a way to frame kind of how those conversations are trending and how much of the price increases is being adopted today versus maybe that driving discussion to drive more adoption and maybe the price increase will come in kind of later or in fact will come in later down the line?

Yeah, sure. Hi, Steve. It's Eliran. So in terms of price increase, we already communicated, you know, to I would say around 40% for our customers. The price increase, just as a reminder, we ended last year with 225,000 customers, significantly higher than, you know, some of our peers. So and on that front, we also would like to mention that we anticipate total customer count growth around, you know, to grow significantly. This year, high single digits. The fact that we basically implemented the price increase, obviously the ones that were kind of small users or students or small companies that didn't see the value, we would have expected churn. So now we are focused on more high-value customers. With regards to the enterprise customers, obviously they are in higher tier, so there are negotiations going on. Reception was very well, but it's important to mention the things that I highlighted as part of us continue to onboard the price increase.

Okay, that's helpful context there. And then I guess maybe we think about the impact to metrics. I mean, the 50K, 100K ads came in pretty solid. How much of that is attributable to the price increases coming in here? And how should we think about the trends on those ads throughout the rest of the year?

Yeah, hi, Steven. It's Aron. So I don't think it's had almost any impact on the growth in terms of the $50K and $100K. Those conversations take longer. We expect, you know, kind of the first lot of the price increase to finish by the end of Q3 of next year. I think that's where most of the enterprise accounts, definitely about $50K, will renew and, you know, will benefit from the price increase for those accounts. So it will take another kind of full year to do the full cycle for those enterprise customers.

Okay, perfect. Thanks for taking the question.

Thank you. Our next question comes from the line of Scott Burke from Needham & Company. The line's open.

Hi, everyone. Really nice quarter here. I had a question on the 80K seat deal, certainly more than the last largest customer size of 25K we heard last year. But as you think about a deal that size, is that customer fundamentally purchasing anything different in terms of feature functionality relative to maybe another customer at 500 or 1,000 seats? Hi, it's Roy here.

Essentially, they're not using us for anything materially different, just at scale. They did take us on the work management ticket and managing projects and portfolios and workflows across the organization. They understand our roadmap. They are with us for a long time. And essentially, when you reach those scales, there are things that are needed from the platform, like, let's say, different user management and other such governance features, which we do have and working on all the time. So the product, the core product is the same, but the, let's say, management around it is is a bit different, and we have been working on those things for a long time as well.

Understood. Helpful. And then, Elrond, as I look at your gross margins, they were an all-time high in the quarter, greater than 90%. Should we assume that they're going to remain greater than 20% or, excuse me, greater than 90% going forward, especially with how you've been able to reduce some of those customer service costs through the Gen AI technologies?

Hey, Scott. So, you know, I think, as we mentioned in our script, it's going to be high 80s. I think the 91% is an outlier to a certain extent. You know, timing, spending, I would say high 80s is probably the right number to look at.

Very helpful. Congrats on a good quarter.

Thank you.

Thank you. Our next question comes from the line of Taylor McGinnis from UBS. The line is open.

Yeah, hi. Thanks so much for taking my question. The first one is, so you saw stabilization to an inflection this quarter in NRR with those larger customers. And I think that was a little earlier than expected, but you reiterated the stable NRR guide and then slight improvement in 4Q. So can you just comment on what's driving some of that conservatism despite recent trends and the uplift from price? Anything to be mindful of in the second half in terms of renewal or gross retention or sources of that prudence?

Sure. Hi, Taylor. It's Eliran. So just by way of expectations, they didn't change from Q1. So, you know, we expect reported NDR to be largely stable throughout fiscal year 24. As a reminder, just to remind you, we are reporting the weighted average of the last four quarters. So even if you see an uptick due to price increase or to consolidations on our platform of larger customers, you know, on the trailing 12 months aspect, the impact on the reported NDR is going to be delayed a bit. So this is why we kind of said that we expect, you know, the impact to be when we exit fiscal year 24 going into 2025. And long term, we expect overall NDR to be between 110 to 115, as we said in the past.

Great. Thank you so much. And then just as a followup, so it seems like CRM and dev customer growth is trending really nicely and they're scaling well. So can you help us, you know, quantify maybe how that might be contributing to growth this year? Are we getting to the point, you know, where these could be more than just the, you know, one to two point contributor, any, um, any help is, you know, we think about that, that, um, into this year.

Yeah. Hi Taylor. It's, it's Iran. So, uh, Look, again, it's pretty early days for CRM. Although both are growing really well, and we showed some numbers in investors about CRM. It continues to grow really well above our expectations, but still it's relatively low in terms of percentages compared to our total revenue count. But given the high growth rate, over time we expect this to become more and more a material part of our revenue. in terms of percentages. But again, right now, it's still early days in terms of growth and relative size.

Thank you so much.

Thank you. Our next question comes from the line of Rob Oliver from Baird. The line is open.

Great. Thank you. Good morning. Thanks for taking my questions. First one is on sales CRM. I know you guys referenced in your prepared remarks or in response to a question that most of your wins generally are still greenfield. But I'd be curious to know what you're seeing in terms of early trends on sales CRM. Is that still kind of filling that void in the market at the low to mid-range where traditional CRM hasn't historically served? Or as you move up market, are you starting to see some bump up against some competitors and some potential competitive displacements?

Yeah, hi, it's Roy. So I would still say we're like 50% greenfield in CRM. It's like a largely growing segment. Okay, and we're like mostly growing, I think, in accounts in the SMB space, but we're going up market into the mid-market as well. And yes, on 50%, we do see other CRMs and which we compete against. And I think what makes us succeed and be in a really good sweet spot is on one end our customability and the fact that we're really good at creating any workflow you want around CRM. Obviously, if you have projects involved as well in the sales process or after that. So that's where we shine. And CRMs in general needs a lot of customization. That's what customers really want. And on the other hand, we're seeing great success in the performance marketing side. So we're able to capture a large, like a great deal of the market demand.

Great. That's helpful. Thank you. And then just a quick question, you know, on your partner network, which continues to have impressive numbers. Can you talk a little bit about the role that partners are playing, particularly as you move up market and bring more of a multi-product solution forward? to customers? Are you seeing partners buy-in and sense an opportunity? I mean, you just mentioned customization necessary in CRM. That's obviously great for the customer. It could also be a source of consult for the partners as well. So just wondering what you're seeing there as you move up market. Thank you.

Cool. So yeah, partners are a significant part of our go-to market, and we're gradually seeing and driving actually towards partners giving more and more services to our customers and helping them adopt. We're even having a nice evolution in the partner space to larger partners doing more professional services to customers, creating deeper integrations and implementations of Monday. And that's like an area we keep investing in.

Great, thank you again.

Thank you. Seeing as there are no more questions in the queue, that concludes our question and answer session. That also concludes this call. Thank you for joining. You may now disconnect.

Goodbye. Please wait. The conference will begin shortly. We'll be right back. you Thank you. Thank you. you you Bye.

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I would like to welcome everyone to the Monday.com second quarter fiscal year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star and the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. I would now like to turn the call over to Byron Stevens. Vice President of Investor Relations. Please go ahead.

Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for Monday.com's second quarter fiscal year 2024. Joining me today are Roy Mann and Aaron Zinman, co-CEOs of Monday.com, and Elrond Glazer, Monday.com's CFO. We released our results for the second quarter fiscal 2024 earlier today. You can find our quarterly shareholder letter along with our investor presentation and a replay of today's webcast under the news and events section of our IR website at ir.monday.com. Certain statements made on the call today will be forward-looking statements, which reflect management's best judgment based on currently available information. These statements involve risk 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 will be discussed on the call. Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our investor relations website. Now, let me turn the call over to Roy.

Thank you, Byron, and thank you everyone for joining us today. Since our debut in NASDAQ three years ago, we have made significant progress in realizing our vision of becoming the platform to run the core of all work for customers. In that time, we have transitioned from a single product offering to a true platform with multiple products. This transition and our strong execution have allowed us to nearly double our customer base, triple annual recurring revenue, and increase our largest customer seat count tenfold. Our impressive growth trajectory aside, Monday.com's unique strength lies in our ability to achieve this expansion while driving operational efficiency. This quarter, we achieved a record non-gap operating profit and notably attained gap operating profitability for the first time in the company's history. Our investments in the enterprise go-to-market and platform infrastructure through MondayDB continue to yield promising results. In December 2023, we announced a significant increase in our largest seat count, growing over threefold to 25,000. This quarter, we are pleased to announce another significant milestone. Our largest seat count has more than tripled once again to reach 80,000 seats. Beginning with the finance and product teams to address multiple use cases, this multinational healthcare company rapidly extended its Monday usage to encompass additional teams within the organization. Impressed by our WorkOS's ease of use and customization capabilities, the company made a strategic decision in Q2 to expand Monday work management across the entire organization to address all work and project management needs. Let me now turn it over to Iran to walk you through some of our product highlights for the quarter.

Thank you, Roy. Our efforts to enhance our underlying architecture with MondayDB remains on schedule and reach another exciting milestone in Q2 with the launch of MondayDB 2.0. MondayDB 2.0 will elevate scalability, enabling customers to manage boards with up to 100,000 items and linked items, and dashboards with up to 500,000 items, significantly advancing their work capabilities. AI continues to be a top priority, and we are actively integrating it across all areas of Monday. In mid-2023, we deployed a third-party GNI chatbot for managing chat-based customer service tickets, yielding impressive results. The chatbot has resolved around 50% of customer service tickets automatically. The initial success had led to a significant increase in chat ticket volume and reduced our reliance on external support for ticket management, as customers benefit from the chatbot quick and accurate responses. We expect this trend to continue through 2025 and beyond, as GenAI further enhances our efficiency in meeting customer needs. Additionally, we are leveraging GenAI to improve the user experience through advanced automation and text management collaboration. In Q2, we introduced the new GenAI features to the Monday platform, including auto-generated action items, thread summaries, and enhanced text extraction capabilities. We continue to make significant progress in enhancing and expanding our product suite. Monday CRM has been a major success, and it continues to exceed expectations, expanding to over 20,000 accounts since its launch in 2022. In Q2, we introduced several new features, including email engagement tracking and timeline reminders to further enhance its functionality. For Monday Work Management, we are focused on addressing the needs of larger accounts. In Q2, we launched our portfolio solution for enterprise work management, which has already shown strong initial adoption. Monday Dev continued to resonate with customers by offering a comprehensive suite of tools for managing the entire development process. This quarter, we introduced a roadmap tracker, which enables users to visualize company epics, track progress, and focus on key commitments. And finally, our latest product, Monday Service, is now on beta and is scheduled for full release by the end of 2024. We remain highly enthusiastic about its potential. In closing, we are less than a month away from the kickoff of our annual conference, Elevate. Elevate is a must-attend event for Monday.com passionate customers and anyone excited about work tech. This year's Elevate will take place in London, New York City, and Sydney over the coming months. Please join us live or online as we will share our vision, strategy, and product roadmap, allowing you to gain deeper insights into our product and future plans. With that, I'll now turn it over to Eliran to cover our financials and guidance.

Thank you, Eran, and thank you to everyone for joining our call. Before I walk you through our second quarter results in detail, let me first give you a brief update on pricing. Our new pricing structure that was introduced in Q1 24 continues to yield positive results and has now been extended to approximately 40% of our customer base. We maintain our forecast of a 25 million in revenue benefit from this new pricing structure for fiscal year 24, which project a total revenue benefit of 75 to 80 million from fiscal year 24 to fiscal year 26. We delivered strong results in Q2, marked by robust revenue growth and enhanced profitability. These results highlight our effective execution and the strong demand of our work operating system products across companies of all sizes. Total revenue in Q2-24 came in at $236.1 million, up 34% from the year-ago quarter. Our overall net dollar retention rate was stable in Q2-24 at 110%, reflecting the recent pricing updates and strong demand for our work operating system products. we continue to anticipate reported NDR to remain stable throughout fiscal year 24, with an expected small improvement by the end of the year. As a reminder, our NDR is trailing four-quarter weighted average calculation. For the reminder of the financial metrics disclosed, unless otherwise noted, I will be referencing non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financial in our earnings release. Second quarter gross margin was 91%. In the medium to long term, we continue to expect gross margin to remain in the high 80s range. Research and development expense was $36.9 million in Q2 24, or 16% of revenue compared to 16% in Q2 23. Sales and marketing expense was 120.7 million in Q2-24 or 51% of revenue compared to 56% in Q2-23 G&A expense was 18.2 million in Q2-24 or 8% of revenue compared to 8% of revenue in Q2-23 Net income was 49.3 million in Q2-24 up from 21 million in Q2-23 Diluted net income per share was $0.94 in Q2-24, best on 52.2 million fully diluted shares outstanding. Total employee headcount was 2,110 employees, an increase of 122 employees since Q1-24. We expect to ramp throughout fiscal year 24 with a continued focus on our R&D, product, and sales team as we build out our platform and product suite. Moving on to the balance sheet and cash flow, We ended the quarter with $1.3 billion in cash and cash equivalents, up from $1.1 billion at the end of Q4-23. In Q2-24, free cash flow was $50.8 million and free cash flow margin, as defined as free cash flow as a percentage of revenue, was 22%. Free cash flow is defined as net cash from operating activities, less cash used for property and equipment, and capitalized software costs. Now let's turn to our updated outlook for fiscal year 2024. For the third quarter of fiscal year 2024, we expect our revenue to be in the range of $243 million to $247 million, representing growth of 28% to 31% year-over-year. we expect non-gap operating income of 19 million to 23 million and an operating margin of eight percent to nine percent we expect free cash flow of 70 million to 74 million and free cash flow margin of 29 to 30 percent for the full year 2024 we expect revenue to be in the range of 956 million to 961 million representing growth of 31 to 32 percent year over year We expect full year non-GAAP operating income of 100 million to 105 million and an operating margin of 10% to 11%. We expect full year free cash flow of 270 million to 275 million and free cash flow margin of 28% to 29%. Let me now turn it over to the operator for your questions. Thank you.

As a reminder, if you'd like to ask a question, please press star and the number one on your telephone keypad. We'd also like to ask you to please kindly limit yourself to one question and one follow-up. Thank you. With that, we will begin the question and answer session. And your first question comes from the line of Brent Brason from Piper Sandler.

Good morning.

Good morning and thank you for taking the question here. I wanted to touch base on the large customer cohort. You added a record number of 100K customers this quarter from a net ad perspective. The net expansion metrics actually improved here despite some macro headwinds. Can you just talk through what seems to be resonating in this environment that's still challenged with those larger customers, why they're turning to Monday? It would be super helpful. Thanks.

Yeah, Brent. Hi, this is Aran. So, yeah, we continue to see strong traction in our larger accounts. A lot of them are just accounts we already had on the platform that continue to expand and grow, increase the number of users. Some of it is software consolidation, but a lot of it is just natural growth and more usage of Monday within their own company. So that's continued to trend and looks really healthy, even given the environment right now. So that's basically what contributed to the increase in the $50K and $100K and also their NDR.

Helpful color there as a follow-up, Eloron. I know you talked about kind of trying to still wanting to reinvest in the business. Op margins came in here better than expected in the quarter. Is that improvement tied to some of those customer support cost savings that you referenced using JetAI, or are there other factors that contribute to margin outperformance here in the first half?

Hey, Brent. It's Elian. Sure. I would say some of it related to the fact that we are using Gen AI and customer success, so we don't need as amount of people like we used to in the past. In addition to that, we're always speaking about efficient growth. So on one hand, while we are behind on hiring this quarter, we have some ambitious plan on hiring, as well as our spend on the performance marketing that is related to the big brain system that we have. then this is something that we always monitor. So as part of our efficient growth, we kind of look at our cost as well, not only on the top line, and this is the result of some of the things that I mentioned.

Fantastic. Phenomenal results, guys. Thanks for the color.

Thank you. Your next question comes from the line of Jackson Ader from KeyBank Capital Market. The line is open.

Thanks for taking our questions, guys. First one is on usage and utilization, maybe between the different customer segments. So what does utilization look like for your down-the-middle, small and medium-sized business customer versus maybe some of your largest customers? It doesn't have to be the 80,000th seed, but like the large customers versus SMB utilization.

Hi, this is Roy. So you mean utilization in terms of like their seat count versus their usage of it or use cases?

Yeah. Yeah. Like, you know, you've got a hundred people and 70 of them really use it every day. And, you know, I don't know, 30 kind of check in every once in a while, like utilization of the product, meaning like how often they're using it. And I guess like if there's any measure of depth to how they're using it as well.

Yeah, so we have a lot of different measurements, obviously, and we see ourselves as a core tool. We go after core use cases, meaning it manages the core of work, and we see really high engagement across our customer base. Having said that, being part of the flywheel motion, what we see is that you have a team using a core use case which runs really the core of what they do, and then they invite other people that are helping them or connecting to them. And the flywheel motion means that over time, they will start creating their own core use case, and then we scale there. So we have two tiers, if you like, of types of customers, the one who are like in the main use case and the one who are kind of like more invited and part of others' workflows. And that's how we grow over time.

Okay. All right, great. And then actually staying kind of on the product side, for MondayDB, can you guys just put the scalability in context? 100,000 items on a board, 500,000 on a dashboard sounds like a lot, but can you compare that maybe to – what those statistics look like under Monday DB 1.0 and then maybe even prior to Monday DB being rolled out last year?

Yeah, Jackson, this is Iran. So compared to Monday DB 1.0, that's a 10x from the limits we had before in the prior version. And the number of items will continue to scale in future releases. So it is a significant growth, both in terms of boards and dashboards. And in future releases, we're going to have another kind of significant steps in terms of scale of what the boards can contain.

Okay. Awesome.

That's helpful. Thank you.

Thank you. Your next question comes from the line of Alex Zukin from Wolf Research. The line is open.

Hey, guys. Thanks for taking my question and congrats. Maybe just help us, give us a flavor for kind of the demand environment, the linearity of the quarter, and particularly the large deal cadence, which was, again, quite extraordinary. Maybe how did it compare to last quarter? How did it compare to your expectations and how to think through, again, this kind of macro, dicey macro environment that we seem to be in for this year?

Sure. Hey, Alex, this is Eliran. So with regards to demand, a few things that I would like to highlight. So SMB, the strength of Monday, and it continues to perform very well. In terms of what we see, demand environment in general, in terms of macro, is inconsistent and choppy. We also saw it from other companies that mentioned it. But the fact that despite persistent macro challenges, we see the demand steady across all segments. This is something that is very encouraging for us. And in addition to that, maybe to provide the KPI to demonstrate the strength is our growth retention is at record levels. But, you know, but we're still seeing some cautious spend environment with many other customers. So all in all, pretty consistent with what we saw in the past. It's not getting any better, but it's not getting any worse. And we maintain our strength in, you know, SMBs and across all segments.

Yeah, and maybe I have to... Sorry.

Yeah, go ahead.

No, just you also asked about the large deal that we closed. So maybe this is Iran. So maybe just to give you some more color on this, it's a European-based multinational healthcare company. They were actually an existing customer of Monday since I think about 2020, four years now. They started, the first use case was mostly focused on finance and R&D, manage workflows and projects. And then we expanded. Now it's being used across procurement, design, internal ticketing management. And basically last year, kind of end of last year, but close now, they made a decision to consolidate on Monday and kind of basically standardized the whole company on the platform. So that's the largest account, but it's a very healthy expansion and long kind of use case over the years and happy partners of them since 2020.

Perfect. And maybe just as a follow-up, on the CRM sales net customer ads going forward, it's been about 4,000 now a quarter of the past two. Is this the right way to think about it going forward? And given the launch of DBT, of the 2.0 version of MondayDB. Is it fair to think that we should start to see that ASRPC go a little higher on the sales side as well?

I think this is Ron again. So I think it's a fair assessment to say that's going to be the pace. Most of the growth is still coming from existing users, so it's less of a case of MoneyDB making a huge impact on the numbers. It's mostly customer acquisition of new customers that kind of generate and kind of help this number grow.

Yeah, and if we're talking about the CRM product, like we see nice growth and we're always going up market and improving our capabilities So we do expect us to be able to get a bigger ACV, let's say, for CRM.

Perfect. Thank you, guys. Congrats again.

Thank you. Our next question comes from the line of Arjun Bhatia from William Blair. The line is open.

Perfect. Thank you, and congrats, guys, on the strong quarter here. I wanted to ask about the service management product build-out. It seems like you're in full beta with that, and maybe now you have a little bit of a better idea of what it looks like at launch. So what is your sense of how that product will differentiate versus competitive products in the market now that you have some feedback from customers, and how quickly it might scale and get adoption out of the gates compared to some of the other solutions you've launched like CRM and Dove?

Yeah, thanks, Arjun. This is Arun. So first of all, we launched Monday Service now in beta. We already have a few dozens of customers using it and paying for the product. Look, it's very early days to say, you know, compared to how this will compare to Monday CRM or Monday Dev. What we can share is that the feedback is very positive from customers, a lot of excitement. One of the things that really resonates compared to other players in the market, again, is the flexibility, kind of similar to the CRM and dev products. But I think specifically for service, it kind of, you know, the effect of this has even more significance to our customers because they want to automate a lot of the processes within the IT service management product, and they want to have more customability on how they capture data and how they process workflows. So this is exactly where Monday shines. The feedback is very positive. People want to use this in addition to other products they're already using with Monday. So it looks very promising. But again, early days, we're going to have a full release towards the end of the year. And then we'll get more traction, and we'll be able to share more numbers.

OK, perfect. That's helpful. And then I think you had talked about in the shareholder letter the work management portfolio product. can you just expand on what that product does a little bit, how customers use it in conjunction with the core work management solution, why it's important for enterprises and then on the economics side of the equation, how do you price a solution like this and how should we think about the upsell? Sorry, a lot of questions in there, but you get the, I think the gist of it.

Yeah, sure. Hi, it's Roy here. So, portfolio management is essentially a way to manage like a thousand projects let's say a lot of projects together so until now Monday was amazing at managing really complex projects with different workflows across the organization and this is a step up for us in terms of the volume of projects even super complex ones but giving a high level overview and management of massive projects, even to management. And essentially it's a building block for us towards managing massive organizations, complete project portfolio and its entire hierarchy. And so this allows us essentially to go up market, to have larger customers depend on us and like really manage the core of of their entire project operations.

Okay, perfect. Thank you.

Thank you. Our next question comes from the line of Ryan MacWilliams from Barclays. The line is open.

Hey, guys. Thanks for taking the question.

I thought it was interesting how you noted you added GenAI to your customer service efforts, and while interactions doubled, you were still able to reduce 30% of your external customer service account. Any learnings here as it relates to the upcoming launch of your Monday service product?

Can you repeat the last part of the question about the... Yeah, just like how did this...

Yeah, how did this customer service experience with Gen AI relate to your upcoming launch of Monday service? Like anything you could bring over to the new product?

Yeah, yeah, thanks for answering. Yeah, it's completely separate. So basically we kind of built and used some third-party tools to automate some of our external customer support. That means supporting our own customers. And that's regardless of building Monday service. In regards to Mindless Service, definitely we're going to have AI capabilities within the product, and it's a good experience for us to kind of experiment on ourselves and saving costs and seeing the benefit of that. But that's going to be kind of more of a future release of that product. The initial version of Mindless Service won't have a lot of AI capabilities in the first version, but Later on, we're going to release future versions with more AI capabilities. But definitely a good experience for us and definitely a huge cost saver for us as a company.

I appreciate that, Keller. And then just on the pricing impact, how are customer conversations been so far around contract renewal? Like, are you capturing the pricing benefit you expected? And then how can we think about the contribution to net retention from pricing this year? Next.

Hey, Ryan, it's Eliran. So just by way of a reminder, we're on target and consistent with what we communicated in Q1. New pricing structure already rolled out to 40% of the customers. So this is stage, obviously, we said that it's going to be until the H1 of next year because this is a rolling forecast. This is a rolling process of 12 months. So all in all, conversations are going well. With regards to enterprise accounts, obviously, because they are big accounts, there is some negotiation in the way we kind of increase prices. But all in all, reaction is good and continue to evolve this.

Thank you. All right. Thank you. Our next question comes from the line of Derek Wood from TD Cohen. The line is open.

Great. Thanks, Al. I'll echo my congratulations. As you're driving some of the strongest growth in the SaaS market, from a competitive standpoint, would you say that win rates against core competitors have gone up, or would you say you're tapping into new budgets you've never been in before and kind of competing against different vendors? Just wondering how you'd talk about the strength of your competitive positioning.

Hi, it's Roy here. So for one, I feel like we're still doing super strong on the performance marketing end because we have great visibility into the return of all our campaigns. We know where to put the money and see the returns. And I think that's something we can do way better. And we still gain a larger share of the market because of that. on the new side. On the other hand, I can tell you we're still treating this as a greenfield space. We see most of our deals were not up against competitors, but in some areas we do. And where we win, we win a lot because of the platform and our capabilities and the fact that companies see they can rely on us in the future as well as in a lot of other things they can do. So, yeah, so on all fronts, we see our position as positive competitively.

Great. And maybe just to touch on that Greenfield aspect, I mean, we've heard that your new AI-powered templates are really helping to drive greater user adoption and just make it a lot easier to spin up new use cases on the platform. Can you talk about how your new AI technology is helping drive higher adoption and maybe expansion rates?

Hi. So it's still early days to know the exact impact of it. We see great positive feedback from customers using it. And it is, like you said, with It's a lot of power because we built it on top of the platform. It's totally integrated into it in a way that you can build whatever you want. Like we showcased in the demo we did in Investor Day. Essentially, you can build any AI work, integrate AI into any workflow you want. And it's super powerful. And we see people building great things with it. And going into the future, we expect great things from this.

Awesome, thank you.

Thank you. Our next question comes from the line of Pinjaleem Abora from JP Morgan. The line is open.

Great. Hey, thank you for taking the questions and congrats on a solid quarter here. One question on guidance slash macro, I guess. Seems like you're raising the full year guide by more than the Q2 beat, and you're not raising the pricing benefit for the year. So trying to understand what gives you confidence in this macro to essentially raise the core guide. Is that largely the large deal dynamics that you're seeing? Is that mainly because of the gross retention improving? Any color helps?

Yeah. Hi, Pinjalim. It's Eliran. So as you know, first of all, we didn't adjust our pricing estimates since Q1 earnings. So it remains at $25 million for the year, fiscal year 24. And just as a reminder, by fiscal year 26, we're looking at around $75 to $80 million. We follow the same playbook that we always do based on what we know today, based on the data that we have, the sentiment. We obviously account for the sentiment in the market. We provide our guidance. Nothing has changed in terms of philosophy, but we do encourage by the fact that, you know, top of funnel is still very healthy. The fact that we achieved, you know, large customer that is proving our use cases is becoming more, you know, perceived by our customers. So all of the above, in accordance of what we know today, provide us with the confidence that, you know, we can achieve the numbers that we provided this guidance.

Got it. Very helpful. Thank you. And one follow-up. Maybe talk about the pricing environment in general in this market. One of your competitors lowered prices while almost everyone seems like raised prices. Do you see any pressure in the pricing dynamics in the market, especially among the enterprise customers? Or do you think people are looking beyond list prices for Monday and kind of focusing on ROI? Yeah.

Evan, you want to?

Yeah, I can take it. Yeah. So, look, the price increase reception went really well from our customers, specifically in the enterprise segment, very receptive. Again, it's literally the first time we've raised prices for existing customers. So, given all the value that we added to the platform, they received really well. I would say that in the A-B test that we've done before and also we see now, it has some a little bit of impact on customers that are, you know, very, very small businesses. I mean, individual users or companies of two or three people. So that's my impact, that total customer count. But we anticipated this and we kind of planned that this will happen. And we think that, you know, it kind of correlates with our focus to go up market and focus on teams and kind of larger mid-market and enterprise customers. That's pretty much in line.

uh but apart from that like we see no impact on our existing customer base and and definitely not the enterprise segment got it thank you very much thank you our next question comes from the line of catherine ing from goldman sachs the line is open

Thank you for taking the question. You highlighted impressive internal metrics regarding the implementation of GenAI services, while also mentioning the rollout of new functionality to customers on the platform. How is the success you have seen over the last few quarters shaping your view on this technology and how it's going to be incorporated both in the broader software ecosystem and Monday in particular? Elrond, I'm curious to hear how you're thinking about this in terms of its ability maybe change customers' propensity to pay or the need for the number of subscriptions customers opt into. And I have a follow-up.

Yeah, sure, I agree. So, yeah, look, definitely the technology is real, and we've already seen some great benefits from adding features. I think so far we mostly were focused on adding platform to abilities in terms of AI, meaning allowing our customers the same flexibility and and allow them to integrate AI workflows into their existing work. Kind of the next phase for us right now is to add AI capabilities into our product suite. So add specific AI features to CRM. Obviously, Monday's service is going to benefit from AI features. So right now, our kind of future focus is adding more AI capabilities to the products themselves. But again, we're working on both fronts. You know, the feedback is good. It takes time for people to adopt those features, definitely. But the ones that do, we hear great feedback.

Yeah, maybe to follow up, Gilead, to your questions on customers. I think that the big question with AI is always about monetization. So obviously we saw that the infrastructure companies, as well as the hardware, are benefiting from the fact that there is, you know, an AI kind of boom. But I think, you know, we are now focusing on, as Eran said, adding value to To monitor this, we will have a few options in the future, either as part of an add-on or to add it as a feature or functionality to our existing solutions. But nothing, I mean, we didn't account for this this year. I think in this year, we are looking mostly at the development and the contribution to retention and adoption of the platform by our customers.

Perfect, thanks. And how is the adoption curve of CRM and dev shaping your view on pricing and go-to-market more broadly, particularly as you look to the GA of Monday service and future products? Should we expect this to follow the same curve in the sense that it will be released to new customers before existing, or are you guys taking a different approach?

We're using the same approach. As I said, monetization will come later. You know, maybe it will be, not maybe, it will be part of the total offering, but in terms of Changing the pricing due to AI, it's still early days, and I think not now.

Yeah, but I think maybe you specifically asked about mindless service rollout. So specifically about that, we're probably going to follow the same path. That means go to market with a new product. But again, judging from what we've already seen in terms of demand from our own customer base, I think there's also going to be a strong cross-sell opportunity there with Monday service. So, again, it's a very early day, so it's really hard to determine. But in terms of people searching for such products online and also our own customer base, I think we're going to benefit from both.

Perfect. Thanks.

Thank you. Our next question comes from the line of Michael Baird from Wells Fargo. The line is open.

Hi, congrats on the quarter and thanks for taking my question. I want to touch on cashflow for a second. Uh, it looked like cash from the quarter wasn't quite as robust as operating margins, but the implied rest of your outlook looks incredibly strong in particular in Q3, but Q4 remains a little bit low implied. Anything to point to on seasonality or timing of free cashflow and maybe how to think about that, uh, beyond this year and then the follow up. Thank you.

Yeah, sure. So with regards to free cash flow, we mentioned in the past that there is some seasonality. For example, in Q2, this is the month or the quarter where you pay the salary increases or you pay commission for the salespeople, vacation days, and all of the above. So this is something that is usually traditionally more expensive in terms of free cash flow. Q3 and Q4, I would say there is some seasonality mostly related to the fact that there are sometimes one-time events. But other than that, with the exception of Q2, which is more seasonality-wise, and some Q4 that we paid some commission for the salespeople, this is basically the behavior of the free cash flow. I would mention one thing that is part of our moving to new offices in London, we get the benefit of $11 million cash incentive related from the prior landlord. So this is something that obviously we took into account as part of our annual estimate. So this is something that I would say is a one-off, $11 million that we are getting. But all in all, we see the fact that basically operating profit and free cash flow are getting more closer in terms of the numbers, percentage-wise.

Helpful. So to be clear, the $10 million of the incremental free cash flow raise was from the incentives, and then does that also explain the pickup in CapEx?

Yeah, pickup in CapEx is related to the fact that, you know, as we grow in terms of number of people, we added 123 people and we exceeded 2,100 employees. Yes, we invest in offices to accommodate for all these people. So this is the increase in CapEx.

Helpful. And then a quick follow-up. So with service coming out later this year, you had three strong new products come over the past, we'll call it 18, 24 months. Nothing's been announced beyond that. So how can we think about new products or how you're thinking about new products or areas to focus on beyond service from here?

Yeah, this is Aran. So right now we don't expect to add new products in the I would say, you know, coming future, we're pretty much focused on going deep for each one. That means we're going to focus on CRM, dev, work management, obviously, and service. And going deep means adding more functionality. Maybe we're going to have, like, subproducts within those kind of mini product suites, but we're not going to open more product lines in the upcoming future.

Thank you. Our next question comes from the line of Michael Funk from Bank of America. The line is open.

Great. Thank you for the question this morning. You know, I think you briefly mentioned earlier that, you know, part of what you're seeing is consolidation, you know, a small part of your growth, but still seeing it. Anything to call out on, you know, your product advantage or reason customers are consolidating onto Monday? or maybe why they're moving away from competitive products?

Yeah. Hi, Mike. This is Ron. I think the main reason what we've seen, again, it's not huge numbers, but, you know, it's definitely a little bit growing. The customer consulted on Monday mainly because it can do many things because of its flexibility. I think where other products, you know, don't have this ability is where they're kind of built for one purpose and then, If you want to add more use cases or want to kind of consolidate other products, it's almost impossible technically to do it. And with Monday, a lot of our customers managed to do it and kind of consolidate different products they're using into the platform. So just with the nature of the flexibility, it allows our customers to do more and more of that consolidation.

Thank you for that. And as a comment on the macro, I know you mentioned you've already seen some macro impact. It's been an interesting quarter with some other software companies, you know, highlighting a real slowdown end of quarter in demand. So, you know, love to hear your thoughts and maybe why you're seeing less macro impact. And then, you know, if there's been any shift in, you know, in incentives, you know, Salesforce compensation that you've implemented to maybe address some of the weak macros.

Hey, Mike, it's Eliran. So maybe as we said earlier, the demand environment in general is still a bit inconsistent and choppy. But for us, we emphasize in the past, so despite the macro challenges, we see a steady demand across all segments. SMB is an area of strength to us, but also mid-market and enterprise continue to grow in a very nice way. So it's not related to the fact that we implemented the new compensation. This is very early days of this implementation, but hopefully over time we are going to see the benefits of that as we continue to kind of segregate between segments and the way we compensate the salespeople for each segment. I would say it's also related to the fact that our growth retention is at record levels. Although we see cautious spend environment, We're encouraged by the fact that customers are unlocking the value of Monday platform as we continue to add more value and more features and functionalities.

Great. Thank you for the time.

Sure. Thank you. Our next question comes from the line of DJ Hunt from Canaccord Genuity. Your line is open.

Hey, guys. Congrats on a nice quarter here. Good to see the results. Uh, just one for me, Iran, I want to ask you a high level question around R and D spend. I mean, you guys clearly continue to innovate quickly, but when I look at your business compared to say somebody like Atlassian, right, which maybe they're not the best comp given the unique P and L, but you guys spend quite a bit less on R and D. Can you just talk about that product development efficiency, what drives it and how we should think about trends in R and D spend over time?

Uh, yeah. Hi DJ. It's Iran. So, uh, Look, unfortunately from my own experience, spending more on R&D doesn't always correlate with more execution. So I wish this was the case, but being efficient in terms of R&D, developers, product and designers has always been a goal of us and it's very important for us. Often what we found is sometimes having less people on the team makes the team more efficient as opposed to having a lot of people on the team. And, you know, you've seen our execution over the years. We always believe in, you know, high velocity execution. We drive to make an impact with our product teams and giving them a lot of ownership. So we're very proud in how we manage our R&D team and execution. In terms of the percentage of spend, it might go up a little bit in terms of the Maybe Eliran can add more calls on this, but we're keen to keep our efficiency, and even more than that, we're keen to continue and execute as we scale the company.

Yeah. Hi, it's Eliran. Maybe, DJ, just to add that, you know, in terms of R&D, we always want to hire. This is the number one priority of hiring, bringing resources to Monday. But, you know, the flip side of it, if you compare this to Atlassian, there is always, like, if you look at S&M, And R&D, I would look at them together because it's also important to understand the other divisions as well. So, SMO, we're able to reduce, you know, cost percentage of revenue. In the case of other companies, sometimes it can be the other way around. So, you know, I think that all in all, investment in R&D is a top priority of us, and we continue to be efficient, but definitely this is something that we would like to highlight.

Yeah, yeah, all makes sense. Helpful caller. Thank you, guys.

Thank you. Our next question comes from the line of Steve Enders from Citibank. The line is open.

Okay, great. Thanks for taking the questions here. I guess maybe just to start, I want to ask about the, I guess, annual customers coming up for renewal and the impact of the price increases. are having into that base. Is there a way to frame kind of how those conversations are trending and how much of the price increases is being adopted today versus maybe that driving discussion to drive more adoption and maybe the price increase will come in kind of later or in fact will come in later down the line?

Yeah, sure. Hi, Steve. It's Eliran. So in terms of price increase, we already communicated to, I would say, around 40% for our customers. The price increase, just as a reminder, we ended last year with 225,000 customers, significantly higher than some of our peers. And on that front, we also would like to mention that we anticipate total customer count growth to grow significantly. This year, high single digits. The fact that we basically implemented the price increase, obviously the ones that were kind of small users or, you know, students or small companies that didn't see the value, we would have expected churn. So now we are focused on more high-value customers. With regards to the enterprise customers, obviously they are in higher tier, so there are negotiations going on. Reception was very well, but it's important to mention the things that I highlighted as part of us continue to onboard the price increase.

Okay, that's helpful context there. And then I guess maybe we think about the impact to metrics. I mean, the 50K, 100K ads came in pretty solid. How much of that is attributable to the price increases coming in here? And how should we think about the trends on those ads throughout the rest of the year?

Yeah, hi, Steven. It's Iran. So I don't think it's had almost any impact on the growth in terms of the $50K and $100K. Those conversations take longer. We expect, you know, kind of the first lot of the price increase to finish by the end of Q3 of next year. I think that's where most of the enterprise accounts, definitely about $50K, will renew and, you know, will benefit from the price increase for those accounts. So it will take another kind of full year to do the full cycle for those enterprise customers.

Okay, perfect. Thanks for taking the question.

Thank you. Our next question comes from the line of Scott Burke from Needham & Company. The line's open.

Hi, everyone. Really nice quarter here. I had a question on the 80K seat deal, certainly more than the last largest customer size of 25K we heard last year. But as you think about a deal that size, is that customer fundamentally purchasing anything different in terms of feature functionality relative to maybe another customer at 500 or 1,000 seats? Hi. It's Roy here.

Essentially, sorry about that. So essentially they're not using us for anything materially different, just at scale. So they did take us on the work management ticket and managing projects and portfolios and workflows across the organization. They understand our roadmap. They are with us for a long time. And essentially, when you reach those scales, there are things that are needed from the platform, like, let's say, different user management and other such governance features, which we do have and working on all the time. So the product, the core product is the same, but the, let's say, management around it, is a bit different, and we have been working on those things for a long time as well.

Understood. Helpful. And then, Elrond, as I look at your gross margins, they were an all-time high in the quarter, greater than 90%. Should we assume that they're going to remain greater than 20% or, excuse me, greater than 90% going forward, especially with how you've been able to reduce some of those customer service costs through the Gen AI technologies?

Hey, Scott Eliran. So, you know, I think as we mentioned in our script, it's going to be high 80s. I think the 91% is an outlier to a certain extent. You know, timing, spending, I would say high 80s is probably the right number to look at.

Very helpful. Congrats on a good quarter.

Thank you.

Thank you. Our next question comes from the line of Taylor McGinnis from UBS. The line is open.

Yeah, hi. Thanks so much for taking my question. The first one is, so you saw stabilization to an inflection this quarter in NRR with those larger customers. And I think that was a little earlier than expected, but you reiterated the stable NRR guide and then slight improvement in 4Q. So can you just comment on what's driving some of that conservatism despite recent trends and the uplift from price? Anything to be mindful of in the second half in terms of renewal or gross retention or sources of that prudence?

Sure. Hi, Taylor. It's Eliran. So just by way of expectations, they didn't change from Q1. So, you know, we expect reported NDR to be largely stable throughout fiscal year 24. As a reminder, just to remind you, we are reporting the weighted average of the last four quarters. So even if you see an uptick due to price increase or to consolidations on our platform of larger customers, you know, on the trailing 12 months aspect, the impact on the reported NDR is going to be delayed a bit. So this is why we kind of said that we expect, you know, the impact to be when we exit fiscal year 24 going into 2025. And long term, we expect overall NDR to be between 110 to 115, as we said in the past.

Great. Thank you so much. And then just as a followup, so it seems like CRM and dev customer growth is trending really nicely and they're scaling well. So can you help us, you know, quantify maybe how that might be contributing to growth this year? Are we getting to the point, you know, where these could be more than just the, you know, one to two point contributor, any, um, any help is, you know, we think about that, that, um, into this year.

Yeah. Hi Taylor. It's, it's Iran. So, uh, Look, again, it's pretty early days for CRM. Although both are growing really well, and we showed some numbers in investors about CRM. It continues to grow really well above our expectations, but still it's relatively low in terms of percentages compared to our total revenue count. But given the high growth rate, over time we expect this to become more and more a material part of our revenue. in terms of percentages. But again, right now, it's still early days in terms of growth and relative size.

Thank you so much.

Thank you. Our next question comes from the line of Rob Oliver from Baird. The line is open.

Great. Thank you. Good morning. Thanks for taking my questions. First one is on sales CRM. I know you guys referenced in your prepared remarks or in response to a question that most of your wins generally are still greenfield. But I'd be curious to know what you're seeing in terms of early trends on sales CRM. Is that still kind of filling that void in the market at the low to mid range where traditional CRM hasn't historically served? Or as you move up market, are you starting to see some bump up against some competitors and some potential competitive displacements?

Yeah, hi, it's Roy. So I would still say we're like 50% greenfield in CRM. It's like a largely growing segment. Okay, and we're like mostly growing, I think, in accounts in the SMB space, but we're going up market into the mid-market as well. And yes, on 50%, we do see other CRMs and which we compete against. And I think what makes us succeed and be in a really good sweet spot is on one end our customability and the fact that we're really good at creating any workflow you want around CRM. Obviously, if you have projects involved as well in the sales process or after that. So that's where we shine. And CRMs in general needs a lot of customization. That's what customers really want. And on the other hand, we're seeing great success in the performance marketing side. So we're able to capture a large, like a great deal of the market demand.

Great. That's helpful. Thank you. And then just a quick question on your partner network, which continues to have impressive numbers. Can you talk a little bit about the role that partners are playing, particularly as you move upmarket and bring more of a multi-product solution to customers? Are you seeing partners changing? um a buy-in and sense and opportunity i mean you just mentioned customization necessary in crm that's obviously great for the customer could also be a source of consult for the partners as well so just wondering what you're seeing there as you as you move up market thank you um cool so yeah partners are a significant part of our go-to market and we're gradually seeing

and driving actually towards partners giving more and more services to our customers and helping them adopt. We're even having a nice evolution in the partner space to larger partners doing more professional services to customers, creating deeper integrations and implementations of Monday. And that's like an area we keep investing in.

Great, thank you again.

Thank you. Seeing as there are no more questions in the queue, that concludes our question and answer session. That also concludes this call. Thank you for joining. You may now disconnect.