monday.com Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2023

There are 16 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to mondays. Com's Second Quarter Fiscal Year 2023 Earnings Conference Call. I would like to turn the call over to mondays.com's Director of Investor Relations, Mr.

Operator

Byron Stephan. Please go ahead.

Speaker 1

Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for monday.com's Q2 fiscal year 2023. Joining me today are Roy Mann and Aaron Zinnman, Co CEOs of monday.com and Elrond Glaser, monday.com's CFO. Which reflect management's best judgment based on the currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release for more information on the specific factors that could cause actual results to differ materially from our forward looking statements.

Speaker 1

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.

Speaker 2

Thank you, Byron, and thank you, everyone, for joining us today. In the Q2, we continued to make significant strides in executing our long term strategy, This quarter, we are thrilled to announce the completion and release of Monday DB1.0 to all our accounts. Future releases of Monday DB will provide even more speed, enhancements, scalability and functionality. In Q2, we also launched our AI assistant and introduced several new AI capabilities. These include automated task generation, Formula Builder, Email Composition and Content Generation.

Speaker 2

Additionally, we opened our AI assistant infrastructure to external developers and hosted a global AI hack talk to an interface to enhance the user experience and reinforce a robust multi product ecosystem. We see an extraordinary opportunity to enhance cross selling efforts, Strengthen interdepartment organizational connection and solidify monday.com as a vital partner across all business use cases. Let me now turn it over to Eran to walk you through some of our recent innovation efforts.

Speaker 3

Thank you, Roy. As Roy mentioned, we remain focused on our multi product strategy and ensuring that our products can successfully enable cross functional collaboration for talk. Monday's sales CRM is now available to approximately half of our customers, and we continue to see strong demand for the product. We are committed to continuously elevating our self CRM product with best in class features. This quarter, we We introduced new mass emailing capabilities, allowing users to reach out to multiple contacts through MandyaCell CRM.

Speaker 3

In addition, we've revamped and upgraded our mobile item page, making it easier than ever before to access and update information on the go. We also recently announced that Monday Dev successfully transitioned out of beta. Initial demand for the product has been strong And Monday Dev has already earned a place as one of the top rated bug tracking softwares on G2. As we gradually roll out Monday's sales CRM Talk and Monday Dev to our existing customer base, we see an incredible opportunity to foster cross selling. Since the launch of our product suite in 2022, we expand their portfolio with an additional product.

Speaker 3

This significant expansion underscores the value of our offering and the trust our customers have placed in us. Separately, we are excited to announce that we are elevating the workflow experience for our customers with the introduction of Monday Workflows add on. Monday Workflows offers a fully customizable and visually intuitive interface, about empowering users to build workflows with ease. By utilizing drag and drop blocks, Monday workflow simplifies the entire workflow creation process, making it accessible to users of all levels of technical expertise. The new Monday workflow is currently open to 20% of our customers and will be gradually open to all customers by the end of Q3.

Speaker 3

With that, let me turn it back over to Roy.

Speaker 2

Thank you, Eran. As we continue to grow, we are focused on ensuring we have the right team in the right place to lead monday.com into the future. And we took steps in the quarter to strengthen our management team with the promotion of 2 senior executives. Daniel Leria, appointed as the 1st Chief Product and Technology Officer and Chiran Naue was appointed as our Chief People and Legal Officer. Both Dani and then Chiran has served as an outstanding senior leaders for many years here at monday.com, and we are confident that they will both excel in these new roles.

Speaker 2

Finally, we are excited to announce that this year's New York City Elevate conference on December 6 will feature a segment exclusively for our shareholders. Mark your calendars and join us for our 1st ever Investor Day as we showcase our exciting journey ahead. We are incredibly proud of what the monday.com team accomplished this quarter. We are just Scratching the surface of our potential and we are excited about the opportunities to continue to generate sustainable long term value for our shareholders. Talk.

Speaker 2

With that, I'll turn it over to El Eren to cover our financial and guidance.

Speaker 4

Thank you to everyone for joining our call. Today, I'll review our Q2 fiscal 2023 results in detail and provide updated guidance. Q2 2023 was another strong quarter, driven by increasing customer demand for the monday.com workOS platform and product suite. Total revenue in Q2 came in at $175,700,000 call, up 42% from the year ago quarter. Excluding the impact of foreign exchange, revenue grew 43% year over year.

Speaker 4

Our overall net dollar retention rate declined in Q2, reflecting a continued slowdown in customer seat expansion amid the challenging macroeconomic environment. We continue to expect some pressure on NDR in the second half of fiscal year twenty twenty three and our guidance now assume full year NDR slightly below 110%. As a reminder, our NDR is trailing 4 quarter weighted average calculation. For the remainder of the financial metrics call. Unless otherwise noted, I will be referencing non GAAP financial measures.

Speaker 4

We have provided a reconciliation of GAAP to non GAAP financials in our earnings release. 2nd quarter gross margin was 90%. In the medium to long term, we continue to expect gross margin to be in the high 80s range. Research and development expense was $27,900,000 or 16 percent of revenue compared to 19% in Q2 2022. For fiscal year 2020 3, we anticipate that R and D expenses as a percentage of revenue to be in the high teens as we build our product suite and scale our WorkOS platform both horizontally and vertically.

Speaker 4

Sales and marketing expense was $98,800,000 or 56 percent of revenue compared to 70% in Q2 2022. G and A expense was $14,700,000 or 8% of revenue compared to 12% in Q2 2020 Net income was $21,000,000 up from a loss of $14,900,000 in Q2 2022. Diluted net income per share was $0.41 based on 51,200,000 fully diluted shares outstanding. As of the end of the quarter, total employees headcount was 1646, an increase of 64 employees since Q1 2023. We expect to continue hiring throughout the course of fiscal year 2020 with a focus on our R and D product and sales teams as we build out our platform and product suite.

Speaker 4

Moving on to the balance sheet and cash flow. We ended the quarter with $989,400,000 in cash and cash equivalents up from $935,600,000 at the end of Q1, 2023. Free cash flow for Q2 was 45,900,000 and free cash flow margin as defined as free cash flow as a percentage of revenue was 26%. We continue to expect to report positive free cash flow on a consistent quarterly basis moving forward and to achieve our 3rd consecutive year of being free cash flow positive in fiscal year 2020. Free cash flow is defined as net cash from operating activities, less cash used for property and equipment and capitalized software costs.

Speaker 4

Now let's turn to our updated outlook for fiscal year 2023. For the Q3 of fiscal year 2020 3, we expect our revenue to be in the range of 100 and $81,000,000 to $183,000,000 representing growth of 32% to 34% year over year. We expect non GAAP operating income of $4,000,000 to $6,000,000 and an operating margin of 2% to 3%. For the full year of 2023, We now expect revenue to be in the range of $713,000,000 to $717,000,000 representing growth of 37% 38% year over year. We expect full year non GAAP operating income of $24,000,000 to $28,000,000 and an operating margin of 2% to 4%.

Operator

Your first question comes from Kash Anand with Goldman Sachs. Your line is open.

Speaker 5

Great. Congratulations on a superb quarter, Roy, Eran and Eliran. Glad to see the growth and the free cash flow margin expansion here.

Speaker 6

I'm curious to

Speaker 5

get your thoughts on the Dev OS and also the database product. What is the unique differentiation that Mondae has for these products within its customer base. And if these products are successful, should we expect net expansion rate to stabilize at some point? And when do you think we see the bottom in that, because obviously if you've got installed base potential for these two products, we should start to see a turn in that metric. So just wondering if you have any thoughts on that.

Speaker 5

Thank you so much once again.

Speaker 7

Yes. Thanks, Kash. This is Arun. So just to Repeat the first part of your question. You were asking about MondeDB and MondeDebt?

Speaker 5

Exactly, exactly. The differentiation of these two products

Speaker 7

Yes. So Monday DB, Monday database is basically it's not a product, about a new set of capabilities that we released to all of our accounts and users. You can think about it as an infrastructure change. And the impact of that we just announced that we finished the deployment of version 1.0, which is ahead of schedule and a major milestone process as a company. This new infrastructure just allows customers to dramatically scale on top of our platform in terms of Size of boards, size of dashboards, automations, integrations and we think that this will lead to about enterprise customers being able to dramatically scale their operations and accounts, add more users, more use cases, which will ultimately lead to more net expansion and more usage and more attention among our larger customers.

Speaker 7

Monday Dev top line ventures and designers to work effectively on agile sprints and manage R and D operations. And this product is getting very nicely. We just talk about the beta as we mentioned, and we see some good numbers and momentum, and we see this as a very strategic industry for us as

Speaker 2

a company. Yes. Hi, Kash. It's Roy. I can add that like the differentiator we see for dev and all our products, also CRM and the work management is the fact that we are in a platform.

Speaker 2

The products are built on top of a platform, which allows our customers to Shape the solution to whatever they see fit and how their organization works, and we see this as a huge advantage also on deals and with customers when we talk with them, it's a major thing that it's built on top of the Work OS.

Speaker 4

Com. And now, Tasha, I will address your question on NDR. Yes. Thank you. I wanted to address NDR, but please follow-up on maybe you have

Speaker 5

No, I just wanted to get the thoughts on what is kind of missing in the marketplace with the dev community that you think Yikuduk addressed the particular problem. That was what I was curious about.

Speaker 2

So I think there is like 1 major player within this market. And what we see is that it's very geared towards developers. When we look at the R and D teams, it's comprised also of product people and designers and then you have the rest of the company that you want to connect to. And with Monde, we feel our customers feel they can customize it better to have a workflow where everyone takes Talk more and it's also more connected to other parts of the organization and not just the developers.

Speaker 4

Your questions with regards to NDR. So as we said, we continue to expect moderate pressure on NDR throughout the remainder of the year. And by the way, we took it into account in our guidance and we assume full year net MDR to be slightly below 110%. To your question, when we are we expect it to stabilize though, already going into July, we see signs of stabilization and we expect it to level off by the end of the year. Just as a reminder, because it's a weighted 4 quarters average, then there is a lagging effect.

Speaker 4

Maybe just also worth mentioning that the gross retention on the same kind of on the same level remains stable. And even though we saw some NDR decline, it was offset by strong customer acquisition.

Operator

Our next question comes from Tien Tscholim Bora with JPMorgan. Your line is open.

Speaker 8

Great. Hey, thank you so much and congrats on the great quarter. Roy or Ron, I want to ask you about the platform itself as you talk We're talking in the previous question, mainly about the marketplace. So it seems like the percentage of apps that are being monetized are kind of going up steadily. I see it about 45%.

Speaker 8

You recently launched the API versioning. One of your partners said it could accelerate third party development. You are exposing the AI layer as well as the workflow engine seems like to the partners. Do you think marketplace starts emerging as a fuel growth driver in 2024.

Speaker 2

Hey, Benjamin, it's Roy. It's hard to say how much material it would be because we have our core product, the CRM, the dev, the work management, which is the main growth driver. We do believe that the marketplace will help us close larger deals. There's a lot of, Like you mentioned, partners are working on it and making each of those products more complete, more suited for long tail solutions. And so we put a lot of emphasis on the marketplace and a lot of investment and in the ecosystem.

Speaker 2

And I think it's a very it's a longer term play rather than just like making the numbers for next year.

Speaker 8

Understood. Just one follow-up on the macro environment. It seems like that 110%, Eliran, You're expecting it to stabilize at about 110, seems like it's a little bit of a tick down, you're now saying slightly below. Talk. What are you seeing in the macro?

Speaker 8

Has that changed a bit? You also said that it's stabilized. I'm a little bit confused on maybe what are you seeing on the macro environment, help us tease through that. And maybe if you can talk about the top of the funnel in July August, that will help. Thank you.

Speaker 4

So demand environment hasn't really changed to what we said, the pendulum in the prior quarters. We still see some pressure with the new customers' expansion, mostly expansion with regards to decision makers are brought to the table and longer sales cycles. So there wasn't really a big change and the pressure on net dollar retention, We also called it out in prior quarters and now said that it's going to be slightly below 110%, but we did see some stabilization, stabilization with the net dollar retention going into July as kind of it's getting flat. So by the end of the year, because of the lagging effect of the 4 trailing quarters, it's going to continue, but then we believe that it's going to to pretty much flatten by then and then hopefully next year we're going to see a change in the trend.

Speaker 8

Understood. Any comments on the top of the funnel demand at this point, July August?

Speaker 4

Total funnel activity remains healthy. We still see a very healthy stream of new customers that are joining Mondae, also having in mind the fact that we now have CRM and Monday. Dev is out of beta. It definitely contributes to the fact that we are bringing

Operator

Next question comes from Jackson Ader with MoffettNathanson. Your line is open.

Speaker 8

Com.

Speaker 9

Great. Thanks for taking our questions, guys.

Speaker 10

First one on the commentary from Monday DB. Are there any kind of quantitative metrics to report in terms of whether these faster load times on big boards are driving

Speaker 7

Yes. Hi, Jackson. This is Ron. So in terms of the impact MongoDB has already, it's about 5x the performance in terms of loading large boards. And as we release additional versions, we'll see more impact on other parts of the platform.

Speaker 7

So definitely customers feel it. We get great feedback from customers. Customers are able to use larger and larger ports. We don't see it yet in terms of revenue numbers on net retention because just as a reminder, we just finished rolling it out to our customers and we expect this to have a longer term effect on customer expansion and usage. But in terms of customer feedback and The results that we measure in terms of loading time and performance, the results are super positive.

Speaker 7

So we're pretty certain it will have an impact. It's really hard to quantify it Exactly right now.

Speaker 10

Okay. Yes, that makes sense. And then In terms of the net retention rate, I hate to kind of keep coming back to it, but I'm just curious whether There's any in the signs of turning around that we kind of that you talked to in July, A little bit more lift as we head into next year.

Speaker 4

Jackson, it's Elivane. It's pretty broad based. We're seeing it When you look on a month on month basis, first of all, it's the decline is becoming more and more moderate, but across the board. So I wouldn't call out any specific segment, Just more encouraging across all segments.

Speaker 11

All right. Okay, great. Thank you.

Operator

Next question comes from Steve Enders with Citi. Your line is open.

Speaker 6

Okay, great. Thanks for taking the questions here. I do want to ask on the CRM docuseries. And the success of the cross sell back into the customer base at this point. I guess as we Think about that and look at those numbers.

Speaker 6

I guess, what's like the typical customer journey look like going from the platform to the CRM? And is it for kind of net new use cases or is it customers kind of converting over from maybe already using some of those existing capabilities for CRM like use case?

Speaker 7

Hi, Stephen. This is Arun. So as we mentioned, over 1600 accounts that were using work management as well as the CRM product and the product in addition to that. And so it's not like initially buying those 2 products, but accounts that were already using Mondae sometimes for a few months, sometimes over a year, I've explored our product offering and then decided to buy the CRM product. I think what's interesting what we found is that Almost in all cases, the CRM users were in addition to the ones that were using the work management platform.

Speaker 7

So you would see people, salespeople and manager from the sales team buying additional seats for the CRM product. So I think this is kind of really encouraging to see other departments joining and us having a large deployment within customers. So mostly with new teams. Sometimes they were already users from the work management, but a lot of times it was new teams that were introduced to the new CRM product. And just a reminder, we didn't put a lot of effort yet to promote it within the platform or did any promotions or sales team started approaching strategy of selling moving products to different departments within the organization.

Speaker 6

Okay, got you. That's helpful. And then maybe for Elrond, really strong free cash flow in the first half of the year. Is there anything that we should be thinking about in terms of like linearity throughout the rest of the year and anything like one time in nature that maybe

Speaker 4

talk. Steve, with regards to free cash flow, so when we're looking at Q3, we're probably looking at high teens And we are looking at fiscal year 'twenty three as a whole, probably low 20s. We're seeing a very healthy discipline spending and improving efficiency that also contribute to that, call. A very healthy top of funnel activity that contributes to the collection cycle. So all in all, we kind of increased our expectation for Q3 and the end of the year.

Operator

Next question comes from Arun Batya with William Blair. Your line is open.

Speaker 12

Perfect. Thank you and congrats guys on a great quarter. I wanted to touch on some of the upmarket traction that you're seeing. It's clear 50 ks customers are strong. You're rolling out product capabilities with DB and workflows that are going to be more catered to the enterprise.

Speaker 12

Have you thought just at a high level about about how far upmarket you would want to go, like what's the ideal customer profile for you as you focus on more enterprise capabilities, whether that's from a company size or complexity perspective, is there a limit that you're putting on it? Or do you want to Keep moving as high as possible into the enterprise.

Speaker 2

Hey, thank you for the question. It's Roy. So I think it's a journey going upmarket. We've been taking it for a while now and every time we Keep seeing as we roll out new features and new capabilities, we see strong demand for even deeper and newer ones. Talk.

Speaker 2

So we do not see ourselves as limiting our the company to an exact size, But I think it's a journey that will take a few years to really go and to larger and larger companies all the time. And we are pushing towards that direction.

Speaker 4

Maybe Arjun, just to add to Roy, this is Eliane. We have at the end of last year, We have the 196,000 customers. And when you think about adding more capabilities and more functionalities and more products, Basically, it allows us to have better retention and increased monetization of not only new customer, but existing customer base. And as part of this journey, customers that may be joined as SMBs or mid market can become enterprise accounts in the following year. So we have both the new customers, the land and as well as expansion within existing customer base.

Speaker 4

There's our potential for growth.

Speaker 12

All right, perfect. That's very helpful. And then I want to touch on the new products again because it seems You're getting a lot of good adoption on dev and CRM, both from new customers and cross sell into the base. If I look at the 1600 customers that you That have kind of cross sold from work management, I mean, there's quite a few that have just adopted CRM or dev net new. And so the question, I guess, is How do you think about dev and CRM becoming a top of funnel landing point for customers and then cross selling the other way into the work management platform.

Speaker 12

Is that opportunity that's still out there? Have you seen those 8,000 plus

Speaker 7

Yes. Thanks, Arjun. This is Arun. So I think you made a great point. Obviously, those products are Obviously, more new than the work management product.

Speaker 7

So we are more focused on seeing how existing customers can move from about work management to CRM or Dev, but one thing that we really focused on from the very beginning was to make those products also and substantial go to market for us as a company that was our initial focus. So definitely going forward, we'll see accounts moving from CRM to work management. And going back to our strategy, I think it really helps us as a company in 2 ways. 1, really expands our go to market. So instead of having just one, which is work management, now we have multiples of both CRM and dev and work management, But also it allows us to have a greater ACV for customers.

Speaker 7

So, you can buy customer, but the potential revenue potential expansion is not limited only to that specific vertical, but to have multiple products on top of that. So I think that creates a big opportunity for us in terms of go to market and going forward, we'll see the other way around people moving from CRM to work management as well.

Speaker 12

Com. Got it. Thank you very much and great job on execution guys.

Operator

Next question comes from Derrick Wood with TD Cowen. Your line is open.

Speaker 13

Great. Thanks for taking my questions. You guys mentioned that you launched the AI assistant this quarter. Can you just talk about what the initial interest talk. And then just remind us how you're thinking about the approach to monetizing AI down the road?

Speaker 2

Sure. Hi, it's Roy. So We have taken a several layer approach to AI, where we started with like adding a layer to the platform to the entire platform that you can add any AI capabilities you want to any section of the product. And we released a few examples for it, like formula builder and like auto complete stuff and those kind of things. The reaction we got from the marketplace actually from developers was amazing because we had like 1600 people signed up for our hackathon and a lot of apps are being built right now and we were hoping to launch now going forward.

Speaker 2

I think it's very early days and we see a lot of customer interest in those areas, and we feel it's a journey ahead that we'll take and we're really committed to AI And even adding more stuff going forward with AI as really it's like

Speaker 13

Got it. Thanks. That's helpful. I guess just staying on product discussion, Now that you're through 1.0 of Monday DB, what's the next phase? I guess the 2.0, can you just give us Some color as to what things we should be expecting out of 2.0 and what that timeline may look like?

Speaker 7

Yes. First of all, we have a complete timeline on our website, which we share with our customers as well. But overall, next phase, which is the Monday DB 1.1 is going to be released in Q4. This year, the focus is going to be on large dashboards. Just as a reminder, a dashboard contains data from multiple boards.

Speaker 7

So that will go through a radical transformation in terms of performance and capability. And then we plan another minor release of MediDAY 1.2, which is going to focus on our API and assess the bills such as filter and sort and aggregation. Going into next year, 2020 Call. We're going to do a major release of Monday 2.0, which will be a really game changer in terms of accommodating larger and larger count, so we're going to focus a lot on just sheer size of databases and accommodating very large enterprise accounts. So We have a lot of releases in the pipeline, but having MongoDB 1.0 already released is I think the most significant part because now all customers are using new engine and those incremental releases are going to be much easier to Get Out into our to our customers.

Speaker 13

Great. Thanks. Congrats.

Operator

Next question comes from Brent Thill with Jefferies. Your line is open.

Speaker 11

Thanks. The magnitude of the beat was great. Call. You actually raised the guidance more than the beat. I'm just curious if you could maybe characterize the strength that you're seeing, where you're seeing it to raise the guidance more than you actually saw flow through.

Speaker 11

And I had a quick follow-up.

Speaker 4

Hey, Brent, it's Eliran. Yes, so based on just a well reminder, we beat revenue by $7,000,000 and with the help of also the FX, dollar versus the Israeli shekel was very strong. It's also contributed to the fact that we are healthy on our cost side. So the combination of the new products that we have, The momentum that we are seeing together with the disciplined and efficient spend that we have as part of our Monday playbook and provide us with comfort to increase the guidance for the end of the year and to achieve these numbers.

Speaker 11

And when you think about for CRM, the type of price uplift that you're seeing in some of these deals, is there and average or when you think about the monetization, ultimately, what do you think this looks like in terms of the additive nature to what you're seeing already in the core platform?

Speaker 7

Yes, Brent. So this is Eran. So I think it goes two ways. 1, as I've mentioned, we see new users using those additional products. So that's additional seats that we didn't have before.

Speaker 7

In addition to that, The CRM product has higher pricing per seat and we're going to experiment with that. We're still below the market average, so there's more room to increase those prices. So I think both in terms of the individual pricing for a product and also the potential and having more seats for a company, those two factors as a major upside to increase the average ACV of our customers. Com.

Speaker 11

Thanks.

Operator

Next question comes from George Iwanyc with Oppenheimer. Your line is open.

Speaker 11

Thank you for taking my question. Maybe digging into the competitive environment, are you

Speaker 7

I think it's pretty much aligned with what we mentioned before. As a reminder, 70% of our deals will see 70% no competition at all filled with greenfield. I do want to mention that in terms of the vertical products, we are seeing new competitors in the CRM market. We see New competitors such as Zoho CRM and HotSpot and a little bit of Salesforce. And seeing those vertical tools appearing in deals, but still not one significant competitor or anything that has any impact on the business,

Speaker 11

Your deployment in parallel with Salesforce or do you see some of the opportunity actually with smaller customers to take over

Speaker 2

stock. Hey, it's Roy. So we definitely see ourselves alongside Salesforce and we have a lot of those deals, even it's our number one integration to Monde sales force and we do a lot of deals together. Talk. And definitely, this is the strategy going forward when we go to larger companies is to be like something that complete sales force and build around it to connect the rest of the organization to the CRM rather than displace them at all.

Speaker 2

So what we do see is like on the small mid market, there we see that we can and Company. We compete with other CRMs that have graduated from the very simple ones and the rigid ones. And when they're looking upward, they see us as one of the only solutions that they can really customize to what they need and that's a big part in CRM to be able to make it your own.

Operator

Next question comes from D. J. Hynes with Canaccord Genuity. Your line is open.

Speaker 11

Hey, good morning, guys. Just one for me. Roy and Arun, How do you think about the opportunity to revisit product packaging to kind of incentivize multiproduct lands as the scope of the platform continues to expand?

Speaker 7

Hi, Didier. This is Iran. I think you touched on a great point. It's actually things we're discussing right now in terms of our strategy going forward. One of the options that we now have as we expand our product offering and also taking into account previously launched products such as Work Forms and on Work Canvas is the ability to package multiple products into a product suite and then offer that not just doc, a package of individual products, but actually as a business solution that we can sell to senior management within companies.

Speaker 7

I think that will also help drive more enterprise deals and talking more with decision makers and allow us to do top down sales. So definitely about our strategy going forward, and we'll definitely look into that.

Speaker 12

Yes. Okay. I appreciate the color. Thank you, guys.

Operator

Next question comes from Andrew DeGasperi with Berenberg. Your line is open.

Speaker 14

Thanks for taking my question. Maybe first on Monday Dev, just noticed you have what just under 800 customers. Wondering if the ramp up for this product could be similar to CRM in terms of where it was at this stage or should we expect a different path? And then I have a follow-up.

Speaker 7

Yes. Hi, Andrew. This is Arun. So it's still early days, I would say, with their product, call. But we're very happy with the traction and what we've seen so far with the numbers.

Speaker 7

It's hard to tell if we will play faster than CRM Great. When we started monday.com, we were very happy with the results. Momentum is very strong and also the feedback we get from customers is very positive. So We're very happy with the growth and we'll see how it plays out. And I think this specific product has a lot of potential to further expand within our organization.

Speaker 7

Roy mentioned that as part of previous answer, but our customers are not using that product just for the dev team. We see on building products using this Monday debt product. So I think this has a lot of potential in terms of growth within the accounts they're using.

Speaker 14

Thank you. And then maybe, Elron, on the Opera Performance Marketing side, I mean, there was Can you elaborate a little bit in terms of what did you see in the market this quarter? Was it unique in terms of what happened? And do we expect that to change in the back half?

Speaker 4

Sure, Andrew. So, digital marketing environment has been largely stable. We didn't see anything materially change that we should call out pretty much what we saw before. Obviously, some of the competitors have to come back into the performance marketing spend in order to start to acquire new customers, but it doesn't really yet affect significantly on the prices. There is some uptick,

Operator

Next question comes from Scott Berg with Needham and Company. Your line is open.

Speaker 9

Hi, this is Rob Morelli on for Scott Bergin, answering the question. I got disconnected a little bit, so apologies if some of these questions were already asked. But with the release of Monday DB and future releases coming, are you anticipating that these will allow you to target and offer different use cases? And then hearing a lot of discussions surrounding consolidation trends within the CWN space, have you noticed any shifts in your top of funnel or with existing customer discussions? Thanks.

Speaker 7

Yes. Hi, this is Arun. So the first part of your question, I think we referred to this part of the other questions, but Basically, as we mentioned, we refunded DB 1.0 and more than anything, we feel this has a lot of potential to go up market and to serve larger We plan to release additional minor versions and major versions in the next few months. And can you just repeat the second part of your question, sorry?

Speaker 9

Just from a consolidation trend in regards to consolidation trends, have you guys noticed anything Shifting within your top of funnel or just with existing customer discussions?

Speaker 7

Yes. So we haven't noticed any change in customer favor. We did see some customers' portfolio in on Monday, taking a few products into the Manda platform, but Nothing that super substantial. We also don't see any customers stop using Monde because of any consolidation. As Edemar mentioned, churn has been very stable, downgrades are very stable.

Speaker 7

So overall, we don't see any movement like this.

Speaker 9

Got it. Thanks for the color.

Operator

Next question comes from Jason Celino with KeyBanc. Your line is open.

Speaker 11

Great. Thanks for taking my question. Yaron, I think you mentioned in your prepared remarks, you're doing faster cross sell. I didn't talk. I can't quite hear it in your response to some of the other questions on this topic.

Speaker 11

Are you expanding here with the help of sales reps or marketing efforts? And then if not, When might it make sense to make a more forward approach here?

Speaker 7

Yes. Hi, Jason. It's Doran. So We see both customers extending what we call no touch, meaning discover those new products by themselves and then buying into those new products and inviting new team members. And we also had ourselves the in store engine approach, including customers and offering them the CRM product.

Speaker 7

So we see both. Definitely with our sales team, we are managing to land larger deals with more potential to expansion. Going forward, we'll keep optimizing that funnel and expand our ability to cross sell into other accounts.

Speaker 11

Great. Thanks. And then Eliron, just a quick clarification question. I know we've touched on your comments on July and Seeing some signs of stabilization, but curious on maybe some of the subtle details, if you're able to help us out. Is this a reflection of slowing down sales or slowing seat optimizations or forward down tiering, just curious on some low subtleties.

Speaker 4

Hi, Jason. So with regards to the recovery. I believe that during the last year and a half with macroeconomy that was challenging, There was a decline that now we see the effect. If you think about the way we look at our net dollar retention, It's a trailing 12 month and then weighted average. And now we're starting to see kind of a pickup from if you compare it to a year ago.

Speaker 4

So Pretty much, there is some positive signs of getting back into the deals and we're starting to to see the 2 cohorts that actually joined at the end of last year. Now we are seeing the positive impact and this is what drives

Operator

Next question comes from Robert Simons with D. A. Davidson. Your line is open.

Speaker 15

Hey, thanks for taking the question. I was wondering in Marketplace, are there any interesting or surprising trends that you're seeing there, Maybe areas with more customer interest than you had expected that you might be able to pull into the core platform or into the product suite?

Speaker 7

Yes. Can you repeat the first part of your question? There was some breaking up. Yes, sorry about that.

Speaker 15

Yes, in the marketplace, I'm wondering about interesting or surprising trends that you're seeing there and how that might inform your future product plans.

Speaker 7

Yes. So we see a good traction with our marketplace, and we see some apps being more popular than others. I think the most popular apps we're seeing right now are additional capabilities on top of the Monday's doc platform to kind of finalize our use cases. Call. Definitely, it opens up opportunities in terms of additional features that we can add to the platform or maybe even thoughts Nothing significant that I can point on right now in terms of specific product features or capabilities.

Speaker 15

Got it. Great. Thank you very much.

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Earnings Conference Call
monday.com Q2 2023
00:00 / 00:00