monday.com (MNDY) 17 Aug 212021 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by and welcome to the monday.com Q2 fiscal 2021 earnings call. [Operator Instructions] I would now like to turn the call over to your host, Keenan Zopf.

You may begin.

Certain statements made on the call today may be forward-looking statements which reflect management's best judgment based on currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. earnings could more differ cause our statements. our specific on materially to forward-looking that factors actual refer release information for the from Please results to

call Reconciliations may measures our financial available Investor to posted IR.monday.com. for in over and at on Additionally, today's comparable release are be With earnings Relations will earnings financial most directly webpage Co-CEO measures the non-GAAP turn Mann, that on call. of the to the call, the GAAP is the discussed Roy I presentation which monday.com.

everyone, and thank joining you Thank you, for us today.

very have company. first excited quarter We successful are our very public a to IPO announce and to as for the results strong completed

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Thank you, Roy.

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financials speak investors turn joining our this and We Company the it on the with the over are excited I'll to covering us to and very to today. are cover Eliran journey guidance. who analysts

Eran, and for you our and call Thank Roy to you, today. thank joining everyone

for within with excited Company then I very the the in guidance. results, customer results the year-over-year are will and came for through the to Revenue large continue more see with continued to base. expansions at evolve. quarter by in the close at opportunities million, discuss detail existing grow which high-growth led second-quarter the up pleased were our second We business scale. and $XX.X we quarter, We demonstrated about in go XX% our

for rate all our dollar over customers retention users for net with XXX%. more XXX% over dollar was net customers rate was and retention Our than XX

average weighted the our quarter reminder, is enterprise rate on We from quarter ended in customers, trailing a with quarter. year-ago dollar focus As Also the XXX% working. a moving our calculation. XXX upmarket up is XXX% retention net four

to talent two quarters, We monday.com, On than ended the in than hires sales employees and we marketing. of QX globally employees These for XXX and focusing and new continue the R&D more on to account more focus sales plan during with with talent the last more than adding our on added XX% period. this R&D hiring added we enterprise a during XXX new particularly aggressively investing and force. front, new

the on detail financial Next, I'll provide second-quarter more results.

turning all unless are point to profitability, I Before to expense items metrics noted, non-GAAP. would that, and like otherwise out

margin reconciliation $XX.X earnings year-ago Research XX.X% of provided in expense release. at and or have the our quarter. XX% came million in financials non-GAAP XX% development to in compared a XX.X%, quarter. Gross from in to up GAAP year-ago We was the

our was continue revenue our and We of invest growth $XX.X high with in million including compared but investment outpaced revenue growth. growth year-ago The engineering by was as to has to becoming of to quarter. customers. the significantly and improvement headcount, marketing users expense primarily marketing more marketing XX-plus in the in Sales pace enterprise focus driven the XX% or efficient, are investments our XXX% we on customers allocating lower R&D, spend

in compared million loss at revenue, operating loss per margin of public revenue increased year. our Similar loss million sales growth significantly was outpaced was company. We reflecting R&D, continue million $X.XX. in organization X% our expense substantial was $X.X the came the team year-ago pace last negative growth. was over being share and costs investment quarter sales has the investments to and loss our have of a the G&A to XX%. X% $X.X or expanded to $XX.X of and make Operating in Net

strong of is headquarter Moving with free and quarter. flow deposits the net from in related to as cash cash the QX. sheet million $X.X balance collection used in We cash. nonrecurring QX cash out short-term excluding quarter less capitalized stemming for the negative million Adjusted restricted used and driven on and and cash $X.X was in equipment billings in as Net Tel cash was $XXX free and flow operating was property cash, flow. in activities, software and million to activities defined from Aviv. cash ended our operating equivalents, such cash costs, Adjusted our strong by items the corporate approximately costs build

we for our the and today of market, as can deliver growing potentially in addressing one than use long-term be future are X we a outlook the we we are are full high third the for turning knowledge Now global believe billion to There workers year of quarter space. growth to that believe monday. We winners and the XXXX. and large more could well-positioned this foreseeable

introducing guidance are as follows. We and QX full-year

in to the year to million, representing XX% to For range third we fiscal of growth the quarter of XXXX $XX million expect XX% revenue our $XX be of year-over-year.

loss million operating $XX We expect to non-GAAP million. of $XX

XX% are expected to the in $XXX be XX% For $XXX XXXX, year-over-year. range million, full of revenues to the year million to representing growth of

$XX operating We million of operating of expect negative million operating full in and XXXX compared XX% non-GAAP $XX between to and loss year of million margin and to loss negative $XX.X that maturity. large the We very for negative market can we are operating believe in of growing and foreseeable XX%. as future high margin growth addressing a deliver is we its still early XX%

phase Relations note target conducting that we will the number investments in that growth a our September. make to to to at active over and As present against for a we I'll be business Investor result, questions. margins. to will be near-term intend With roadshows prioritize continue the started continue over and progress in profitability, of to we investor and non-deal Operator? operator to conferences turn I'll regard with it also

Instructions]. Goldman Sachs. [Operator Kash Rangan,

Roy, you first Hi, one and What much. start. a you. a the great results as public congratulations very on Lovely company. quarter fantastic thank for day question

and just sales made scaling quarter out great look yet It your to a drive going sales flow, think losses. a progress about it about calls productive but for forward? about effort and -- in Can And the the seems for as little talked building is the shift you're how you towards for you to less and talk getting still margin enterprise. marketing you, marketing selling likely certainly started guidance did You services how cash with significant Eliran. one had does like bit enterprise traction it a Because investments. and free previous snapback we sales marketing your that more and to you pertains should operating

things investment just you to wondering and the in you second themselves? congrats. any So, quarters prove or wait so trying keep there's if half specific much, the conservative just Thank making are till

thank It's Kash, you. Hey, Roy.

on touch, after mentioned are funnel IPO, scale. we driven paying we we have they and a force leads. putting do marketing our Like is we -- emphasis before yes, by growing. like during in we become help get So, addressing customers the a lot them that leads those our pay of no customers. And are that Those sales

results we the what marketing, see is efficient while a quarter. in invest lot So, can we that we're more which with this that you in see way, a doing

new we sales its to approach customers while more. customers efficient, the becoming and way Our to is approach team grow more our scale

you more that working So, think really working well better sales two better. we it's the seeing mentioned and and see maturity these team both we our been are, growing has before, I of last as reach and years

Eliran. regards we all, very on with we our Kash, hi. that question This to to to comfortable guidance, first so guidance aggressively. continue and are on feel is we your confident invest have the plan With of

for half the hyper of continue good did invest aggressively to are the the that, we things in One to us of important scale. generate growth year result say while in going to that's additional order at in we QX, second very to

X.X. Just our terms efficiency well capital in numbers, of is above

of more reminder, that a invest every for as Just than section, [Indiscernible] $X.X we dollar we in terms basically ARR. generate

would going a to opportunity there ensure this there costs. greenfield additional it don't continue huge and are to to be opportunity; pass So, a like is Therefore, we is market. we And invest.

going in continue marketing, sales hire aggressively are R&D. We and to to

Aviv. Tel are new have of impact to going in We the our headquarters full

go in Hopefully continued going Kash? question, of as going to some that growth to your continue other to Does organization. this the we places are we to answer continue see forward. are We across invest

start. Great you Congratulations. Thank so Absolutely. much.

JPMorgan. Murphy, Mark

morning. the on Good of from you use the customers someone application. Matt Mark the of Murphy. behalf is your new cases customize And us on who will us can something build of using many I their ground maybe then the to about solutions congratulations quarter. solutions code/no Can my This completely to of really platform distribution advantages Coss adopted help versus up? prepackaged using understand low code talk you monday add how to the prepackaged have are by

please? Sure. This repeat the question, first Eran. Can the is you of just part

Yes.

customers monday their you if your build application versus ground a prepackaged So, to the buy own from up. using of sense solution have a customers monday.com, using new

Yes, okay.

So, this is Eran.

way part more majority case And interesting the use ongoing that, start customers basically But expanding two to kind usually think more I time this So, is own and with works they usually the their and meaning can solutions solution, of of process. expand through to of their one the cases. of usage building product is But them problem their also customizing existing our their time, we say need. And for the trying that solutions finding with how a further their start it own, cases. the search then to use usual over just then is lead use see and solve. very on I trends. the solution, vast the within specific and because a more we organization. use over that One they're own templates matching prepackaged would majority kind

the monday during automation everybody code capture essentially, building building no XX% disclosed low the using think if as to and customers itself of process, And essentially of over and it, coms we basically database terms IPO code, use board so capability, data. customizing a our integration. the is you using about In code/no is the

accounts. it's So, within pretty enterprise popular

our say, customer speaking, code leveraging low code capabilities. would So, of monday I and no every broadly is

Brent Jefferies. Thill,

on and where more if could curious you provide of a traction examples great some little was I you. staying you're spend Thank maybe the enterprise time traction.

you more of if could terms buildout about also maybe and think your deployment is largest in us a little how talk I going. that give color

that heavily growth in our we is growth. this the the year-over-year high enterprise touch new faster retention business. going over forward. new the net heavily the adding than of for invest We beginning Company, more customers in very customers, demonstrate the capabilities. invest product customers part strategic keeping no Those forward. and of of and XX,XXX, as at time, better call XXX% our into business we the business into business see do this the the we features pay making part over of significantly into they funnel. From and high so a side the is the customers launching at numbers, And call, very bring part whole going the and of growing But to same our expand we keep Yes, mentioned are of features

on it to that that's into Yes, want enterprise it's enabling security that's we are Roy. in to we features where biggest wise. with things. and They the governance. our focusing control And just all enabling I now right get and can us open product door those larger add basically customers. is need And focus

environment out? Great. geographic And that stand a There APAC. you're you trends that the lot be EMEA given in guys office on there the numbers great Have any coming back the for been some really in people helpful. between been right were as just any as the relates you would matter questions Anything the US, what color any differential customer has it are now are that seeing growth. suggest it that behavior? to to we Obviously have return noticeable of if different and in. doesn't But seen curious

before So, reminder, hyper we and COVID to post expect continue it we come a also growth Hopefully hyper soon. to COVID. grow enjoyed will as scale

we And As added Polish. see is revenue which of the our the -- we platform customers language US, XX% even of geographical in our XX% our to of outside are reminder, is the US. a XX% is another breakdown, breakdown non-tech.

have we XX languages. Now

through in see operate our places geographies customer us existing operate this we we where have -- channel. to markets as partner's where force also sales within in visibility of what to And the in. So, within have this helps a we basically reminder, expanding the gain But channel holistically our already don't is base don't partner ecosystem. you we partner expand we are additional that, the

Blair. Suri, Bhavan William

echo me a want I is guess congrats. enterprise great quarter the I the That Let touch gate. to traction. on my out of

You do have complex how direct sophisticated, more to you to those more trying understand of customers ARR. the motion driven maturing. attribute adoption more ability you two? than balance would that to it's Or XX,XXX-plus I the handle workflows? do much and you getting sales to guess think fact XXX added the I'm this product How it's customer is by

short will be So, my answer both.

I think we've seen sales reps in the becoming sales combination of two we forces. Company One they is had between -- experienced. more more our obviously we and the fact our that are team,

one is effect. this So, part this of

The second we're enterprise we the part is that accounts for to that. heavily into and keeping do invested product

existing on lot another adopt a is we doing [Indiscernible] the scalable. larger And we and interesting product just monday. And another trend see that front progress, we're we for every within to cycle. very are sales cycle that accounts larger see more as is that, accounts sales to make able So, that that

finding cases, So, new of it's like monday. never a departments ending that use new use process can

a not it's deal of a So, process. that more one-time sign but off, you like

we using and where accounts larger larger that's get So, us.

And only freemium on because have what you, understand offering. want freemium? some gave I'd but -- you bit of impact a I'd maybe to on see, and then motion you Got to of freemium? got you. a of have customers to understand love to funnel at color, love what the the reverse the great top to handful, all the then I And but little touch seen it you happen? we like any all, at I've go I'll Thank makes you small sense downgrade hey, Have that seen grow, you. me would got that they'll saying, to

is this Eran again. Sure, so

So, this for is exciting us. very

tier, it cannibalize terms free of that top more that but adds new hurt acquiring Company. this It customers, use launched didn't impact into see just increased or see didn't funnel any we convert And of monday. in payment we the it the customers. the our customers existing on existing for as So, we our

now that. see accounts new that signs of -- this we or again, to created time One paying but plans thing that of over early again are and their funnel early still type like is converting very So, not companies. a interesting being freemium we've reducing super customers anything is days, this, of -- but seen

this increase we monday capability and So, it. what to the people they are that as exposed tool, can I of of exposure and how a think offer the will amount use its

our free users. tier that only add just is limited to now two would I

So, to really a keep it's way for the plan. impacting use it's using those of larger us chooser customers, not and just on type us

like So, plan. user two

got the again. helpful. you, Got very you. Thanks That congrats gentlemen, and for color, is

Brent Bracelin, Piper Sandler.

and afternoon. good go to morning growth I say accelerated I -- to should you Thank to back or XX%. good of here wanted the Growth business. divers the

You year. full-year outlook your are for growth taking XX% up to the

going were into think we quarter. I kind of XX% the at

driver broad-based, is Is adoption that like just here existing the So, look segment that as you strong. of business a optimism, and you expected? business strong, stronger or much enterprise is is particular at performing expansion is than the main just giving you overall the outperforming? region it just Is here It business, there stronger. customers seems the what's is better? It sounds like

Trying much of higher. primary what is to of rank order business kind the Thanks. Your drivers here the optimism understand are.

it you Basically said, the everything is I think all that of above.

rate, being by and customers there new obviously And space So, that secular our momentum of was growth and is our an from to platform. retention over and net which There can quality is obviously be combination category. in expansion is dollar There base, add which the continue to is we the following. within a now XXX%. high driven our demonstrated customer long-term tailwinds the existing our

indications XXX% leader, a we're was the organization fuel brand enterprise market we I up momentum seeing, by the The motion kind As a enterprise accounts, basically fact and we are supported is trend also IPO. to year-over-year. hopefully also Eran had And QX. mid-XXXX. in a seeing obviously, of continues believe The is that was XXX% forward that [Indiscernible] Roy, the Monday. that of by of awareness mentioned the are XXX it we reminder, that that And up. it And motion the and

see So, now this the we investment. fruits of

things the and regards all this combination creating potentially optimism to of our these things with growth all -- continuous to growth. -- So, are

growth there flipside hear losses narrow. It to to Great hire function narrowed here as you in aggressively investing have labor more of and there it's continue a is second where just tight as a much Is losses have half sales something of to structurally that and Thanks. as on the I the right in hyper you would operating you the your color. about understand quarter. you could like? kind market meaningfully here why know appreciate year. the the of Just aggressively guess the narrowing operating I feel spend that, Or marketing without operating that loss now. being you to efficient your are that this able like for not as guidance past? trying drive suggests looks can of

Brent, think not and model. and So, we presented Actually earlier, investment. as I invest indicated to optimize an our aggressively. to costs. to marketing growth what operating kind are we in But sales going in are invest our mentioned phase aggressively. with But direction don't want we continue about as it will within we to we trying we continue are of accordance as I some definitely efficiencies see

second half We further the additional to in believe, I the year. are going costs, see of

As new I the to moved mentioned, we just building.

to hiring, there We aggressively. though Even be are very are challenges increases. going still some are well. are hire to salary we to there with hiring going And continue

year. the We of events are the by going to have end

accordance the we So, phase really costs think be to growth operating But we with second going working that going half are to are are be year. obviously of the incurred model. in our in I

to you. see in the color. Thank Helpful business. momentum Great the

Oppenheimer. Kidron, Ittai

interestingly, And how gate, the XX odds out color. workdocs, today, your quarter raise across great its within more that announcement to Roy What does wanted, you little prices you work made if good give you guys, XX into and pricing your way that are actually a Eran, the next stuff. plans? maybe of talk the I months about bit Hey could plans? the to more us

Yes, it's Roy.

that's So, exciting, the super workdocs.

of docs. we information. start where see And points of very lot a the -- Monday are customers to Monday essentially way boards documents it essentially we allow in a you way, with it's for our stops with that structured people. So, old starting work start the and with usually adding an on platform, Like we more continuing massive something a saw unstructured right? then monday With fashion opportunity

as way start this for new using see to monday. we So, customers a

limit the everyone are pricing start. as to We want to don't we and asked, So, because accessible to want tier you everyone. docs, those kinds limitations that of by

We more consider don't extended now. that for documents will we have into the in but functionality, the tiers future adding

And can if Eran. this is Ittai, I add,

between So, interesting super another the workdocs. that's and point is combination growth

can workdoc board time a the [Indiscernible] you actually within change together the that into again, this real people can vice a embed in the and board of to in and you dock, terms a have very So, intuitively power is, in where versa. fact working from several multiplier and

a You within dock can have a port.

So, can combining products will generate customers of power our both. exciting think two together that those the leverage I very ways

how deployment, largest big us Great. many your Maybe is could are deployment? seats a as now how your follow-up, you largest right if in on update

Frankly, This that currently a have, account the we X,XXX seats. is we is this currently have. biggest is it customer

stuff. Good it. Excellent. Thanks. Got

Canaccord. Hynes, DJ

taking questions. start thanks for the Great here,

Just me. Fortune clearly guys coexistence enterprise free. little Smartsheet, you other a with There's in I your penetration from Asana, tools there. overlap I large bit at could anyone I'll hoping but work like one about management it Eran, yourselves. accounts. talk XXX direct look at feel for was

you position you out. these could do vendor? And consolidate over room around playing a about hoping multiple you vendor So, Or how think be do be you time? large see monday talk Will vendors there that this to in for they always how accounts? single

is a It's Overall Work account DJ. question. Thanks OS. is great Eran. main a It

us but things of monday, important were is super could of the that a really integrate other within lot things a OS there's one key build that for tools. essentially being with So, well to Work

goal be uses a integrated already our all is organization, you into essentially people a to So, Data within application. build data within manage into but the organization place app any functionality to where Monday, core presented can can that of a third-party and the monday. within an tools change synced can can and replace stuff things be be monday. not can back But be lot

it well everybody. to our is with philosophy So, work essentially

very connects positioned backbone everything work not likely that don't an within way But trying makes is so the think I that organization, organization, in are sense. to of We a everything replace consolidation. within point of if customization, it the kind an a it we're

you Thank Perfect. guys, the start. on congrats

Company. and Cowen Wood, Derrick

has about last congratulations Great, how mentioned my you what in and fastest. use But And for the XXX%, up stronger core questions Could thanks revenue investors, how trends? taking lot for management from most growing come three as The popular Maybe questions first was much gross of expansion from unpack is what's you. you and cases retention one a speaking from is net improvements from expansion, much area on my get project we quarter. the and retention or next well. two end XXX% for enterprise rate a Eliran. then are

comment would that that helpful. So, as if could on well be you

Definitely.

to me cases, use the net On Roy with the will question start with rate. or later to let defer I Eran. retention regards But dollar

we have focus are because reminder, population you So, What users. so it's accounts core with trailing expansion basically is retention as kind is cohorts historically up. They see And landing expansion, the basically existing $XX,XXX. they customers recent trailing four quarters, to we see we are higher is accounts, strong cohorts, retention. include than larger XX-plus as is -- and ARR that a this recent is this business base. proxy catching And customers the are something that within of what cohorts, net our accounts customer the this average bigger we at our quarters a at shared looking a if and see we -- when think that less -- the rated about we four have and dollar for a enterprise

enterprise basically cohorts, which is this result I these is DJ, this dollar use net Roy? obviously of you okay, to the expansion cases our impact the impacting And -- also to So, the in And defer see before within With I that our net getting are better, regards accounts. dollar much getting XXX%. retention. impacted retention are to by mean this -- is

perfect. Yes,

Roy, use will to cases. on you defer the I

Yes.

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they So, from have we manage over customers business verticals. XXX different --

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thanks the Okay, for color.

Berg, Scott Needham.

but scenario? functionality in do pricing I Hi, price. you specifically or workdocs, premium also first maybe who over functionality or first situation, general versus don't about not talked an the on in know the how is, it's you next I componentize base think the take more and on an Today you get I included where you the just the guess upsell sell echo it, tier being the results. everyone. functionality strong you the but that wants ever of my congratulations forward. modularize post-quarter as and product, going about the and some But a couple IPO to all-you-can-eat-today years, released question to that

thanks, your question. Eran. Yes, is for so This Scott,

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industries different have in pricing we levels. So, different

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to then we So, package our forward more those can thinking solutions. is significantly perhaps for add and product for tiers going product different solutions, a pricing product and differentiated those

definitely is roadmap. forward our it So, in going

then mentioned couple Understood. you Quite different helpful. partners from a a times all had perspective, during follow-up And script. your

about very to speak should that think had different lifecycle. engage currently become a of always in have opportunity strategy, starting partners over the But to you. maybe or chance still with four Thank business that we to it's sales contributing early partners substantial or three next As you're they monday.com with, we years? ancillary there? be there the go-to-market smaller part Do or will two your a a how

It's Great. Roy.

our So, yes, big part roadmap the partners are forward. going of a

platform with of But first all, to tailor-make companies, the together a us you with connected for don't on. like offer So working that also lot expansion we solutions large have to we want it the mentioned, are places them of enterprises is larger helping and to team global stuff. sales other

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are partnership the big Obviously same, whole a have part as we it's a going our -- of forward. one the every varied very So, vision a not partnerships. but is

Andrew DeGasperi, Berenberg.

taking for and Thanks going my congrats question on public.

wanted follow management First I tools the also the work of know enterprise to up the chasing larger competition on I a ask question. end or lot the of I and are market guess that customer. other

of are greenfield? are now or you So, are mostly was they just I right wondering if these competitive bids any that seeing

they follow IPO. part huge seems literally us for use we -- the Anything and competition. vertical everybody the this just we and that deals it greenfield email of communicate see XX% PowerPoint we and On -- more on and greenfield. customers collaborate. of of And no is a we is like and this see, On as work it trying make efficient. XX% improve opportunity that spreadsheets a It Usually I feel more see, to how a deals the would competition. email of to say, are doesn't something

greenfield development competitors project to is with might for space. using for management monday focused huge this see and the used we compete CRMs. SMB somebody grow market. opportunity is a might a somebody But project we this there's in if speaking, If broadly So, example, huge within CRM other

I development, the it it into seems the salesforce. just some CRM, seems other And that also, as and HR, to expand helpful. That's there's relative follow-up, competitors markets like the unique end in [Indiscernible] software to your these guess, and solutions, other a players bigger pretty

that these was I tools the fields? that wondering end with just don't larger or So, really smaller other see those on and market really software just you focused you are in of these companies field

them the So, as workflows rest people fine. Like workspace, like verticals are door of all connecting, we go-to-market for more And as we to unified and workspaces we with the are those see code you you put bigger the in no a for Meaning really a usually unifying foot they silos, having want companies work see the those lot connect question, and and players, because creating the get pain into ourselves together. mentioned breaking larger we to of companies. If us. those points to mentioned. with great as really allowing as and that's a But them. scale partnering the that integrating into that want create code/low capabilities integrations tools replace, to organization we

smaller they that the is a on use small and of CRMs. So, different that start a land a two lot with on it size small we one And stuff large way use. have that we go-to-market even cases enterprises

then So, it's a for great integrate foot with us enterprises in players. door larger and for the we even

this presentation. gentlemen, and today's Ladies does conclude

disconnect wonderful a have day. You may now and