Here are my notes from the earnings call that concluded a moment ago.
Monday Q4 FY 22
Analyst Q/A and additional Remarks From Co-CEOs/CFO
Eran Zinman, Co-CEO
Roy Mann, Co-CEO
Eliran Glazer, CFO
Monday DB, their new product will allow for unlimited expansion.
Adjusted OI for the first time
Fastest growing segment was enterprise, that grew 84%.
$5 in ARR for every $1 of cash burn.
Achieved positive FCF for the second year in a row.
CRM offering is receiving excellent response, reviews and feedback to existing customer.
One of the world’s largest banks has become a customer.
Upfire collaboration will allow MNDY to take their business to the next level.
FY 23 will continue to expand and plan to expand upmarket w/ expanded product suites, expect to deliver positive FCF for the 3rd year in a row.
Net Dollar Retention Rate remained consistent except for their largest customers.
Gross margin was 90%, and they expect to be in the upper 80’s in FY 23.
Plan to invest significantly in R&D in 2023 to expand suite of offerings.
Expect to continue hiring for R&D.
Q1 RY23: Rev $154 to $156 (up 44%)
Full year FY23: $688 to $93M (up 33%)
Q Please provide assumptions in FY 23 guidance, which is more conservative than usual.
A Some challenging macro conditions. Seeing improving efficiencies in their business.
Q CRM seems solid and 12-13% of new customers. What is the typical size of CRM customers you’re landing?
A Only offered to new customers at the present time. Expect to offer to existing customers in the near future. Mixture of SMBs and larger companies.
Q Momentum in marketer as well as sales. Is there a price point that’s resonating? When will you roll it out to new customers.
A Releasing to existing customers, plan to do this August 1, 2023.
Q Outlook on EBIT line. How should we think about where you’re investing and incremental OPEX and similar to the outlook. Is there a pause in the investments you’re making on the headcount, etc?
A OI saw increase because it cost them less to grow income (scaling). Now going into Q1 they will continue to invest and plan to reach profitability by end of 2025 as well as FCF.
Q How do you view the marketplace opportunity?
A Really care about the marketplace being a huge opportunity for them. Opening up the platform completely. App providers can really build on top of the platform and partners believe MNDY is a greast platform to build upon.
Q MNDY DB will be rolled out in 2024. Was initiative based on customer feedback. Partnership initiative: What is your goal? New markets, new geographies by opening up the platform?
A MNDY DB is in the core of their infrastructure and the next phase of being able to build upon their platform. Allows them to build way bigger applications on top of MNDY’s platform. Infrastructure move to move them to the next level.
Q Net dollar retention for $50K and above customers? What’s driving the weakness?
A With enterprise accounts, they’re coming off a high. Slowdown in seats in largest customers. Seeing decline mostly due to macro economy.
A See less of an impact, relatively stable and see positive signs on the horizon.
Q Seeing displacement from other work mgt tools or mostly from productivity tools?
A When looking at new customers, still see greenfield. New deals are not against a competitor. Win new deals because of what customers see they can do in the future.
A Will increase hiring to increase approx. 10% this year.
Q One of the fucuses will be to expand upmarket.
A Go to market, they have a bunch of plans. New products will impact this and opens up MNDY to new types of buyers. Big game changer w/ different personas, expand marketing channels, companies. They see great momentum in acquiring additional customers. In a good position for hiring beyond 2023.
Q CRO, what changes is he making?
A CRO was managing sales AND marketing and he was promoted to include customer support too. This will allow for greater collaboration and optimize go to market because he has a wider look. Much better collaboration. This will create greater efficiencies.
Q Not seeing headwind w/ SMBs, why are you seeing more stability w/ SMBs than many other companies?
A SMBs can consolidate offerings under MNDY. They see stabilizing of demand.
Q R&D declined sequentially for the first time. Headcount?
A 18% for the year. Impact due to currency exchange in Israel. Long-term they believed 22-24%, but now expect it to be closer to 22%. They’ll obviously adjust as necessary. Year end headcount is north of 300, don’t remember exact number. They expect to continue to hire, as they have very big plans.
Q Guidance, what are you betting in terms of macro? Enterprise slowdown?
A Believe it will same macro this year as it is now. Guidance is what they see now. It’s more about the macro environment, MNDY’s customers are charged per user.
Q Verticalization roadmap?
A They are relying on the partners to extend the marketplace offerings they currently offer. It’s a great power they have, with 170 partners flew into Israel and they had a great collaboration event on how they can expand.
Q Performance marketing and spend?
A 30% Performance marketing and 70% sales.
Q Gross retention.
A 120%. Coming off a historical high, the larger customers are conscious of how much they’re spending. Slowdown in expansions of larger customers was slowdown in MBR.
Q Enterprise slowdown.
A Tech sector impacted more, however it’s 30% of their customers. Hard to tell about larger customers being more mindful of how much they’re spending.
Q How did top of funnel look in December vs. start of qtr.
A Historically 1st quarter is historically much stronger. They anticipate very strong demand in 1sr qtr.
Q Net retention rate. Is this metric going to step down significantly.
A It may go down 5 to 10%
Q Performance marketing pulling back. Is this other collaboration competitors.
A Don’t necessarily see who they are, they do however see they’re getting more customers for less money.
A Focus on product and R&D. Currently continuing with the number they have, but the bulk of the hiring will be in R&D.
Q Do you have a number of competitors who are pulling back?
A Bid on adds in Google, Facebook, etc. They see they can get the same ad placement for less cost. They know what’s working and have a way to track the ROI for every dollar spent on sales and marketing.
Q Given the success you’ve seen on the marketing? Why not step on marketing even more and capture even more market?
A The reasons for not doing so more, they have stepped on the gas. If they see more opportunity, they’ll take the opportunity to do so.
Q AI opportunities to expand?
A Now that they see the barrier was lowered so much, they’ve opened up the platform to allow anyone to build AI tools on top of MNDY. Plan to have an AI hackathon soon. Will see long sales opportunities to expand use cases to summarize content.