Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Monday.Com Ltd (MNDY, Financial) achieved a record non-GAAP operating profit and GAAP operating profitability for the first time in the company's history.
- The company reported a significant increase in its largest customer seat count, growing from 25,000 to 80,000 seats.
- MondayDB 2.0 was launched, enhancing scalability and enabling customers to manage boards with up to 100,000 items and dashboards with up to 500,000 items.
- The introduction of GenAI chatbot for customer service has resolved around 50% of customer service tickets automatically, reducing reliance on external support.
- Total revenue for Q2 2024 was $236.1 million, up 34% from the year-ago quarter, highlighting robust revenue growth and enhanced profitability.
Negative Points
- The macroeconomic environment remains inconsistent and choppy, posing challenges for sustained growth.
- Despite the positive reception, the new pricing structure has led to some churn, particularly among very small businesses and individual users.
- The company's gross margin, while high at 91% this quarter, is expected to stabilize in the high 80s range in the medium to long term.
- There is a cautious spend environment among many customers, which could impact future growth.
- The company is behind on hiring targets for the quarter, which may affect future operational capabilities.
Q & A Highlights
Q: Good morning and thank you for taking the questions here. I wanted to touch base on the large customer cohort. You added a record number of 100,000 customers this quarter from a net add perspective. The net expansion metrics actually improved here despite some macro headwinds. So can you just talk through what seems to be resonating in this environment that's still challenged with the larger customers, why they're turning to monday, would be super helpful. Thanks.
A: Yes, Brent, this is Eran. So yes, we continue to see strong traction in our larger accounts. A lot of them are just accounts we already have on the platform to 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 fairly healthy, even given the environment right now. So that's basically what contributed to the increase in the 50,000 and 100,000, and also their NDR.
Q: Helpful color there. As a follow-up, Eliran, 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 -- or cost savings that you referenced using GenAI? Or are there other factors that contribute to margin outperformance here in the first half?
A: Hey, Brent. It's Eliran. Sure, so I would say some of it is related to the fact that we are using GenAI in customer success. So we don't need x amount of people like we used to in the past. In addition to that, we are 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 the BigBrain 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.
Q: Thank for taking my 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? Not -- it doesn't have to be the 80,000 seat, but like the large customers versus SMB utilization.
A: Hi. This is Roy. So you mean utilization in terms of like their seat count versus their usage of it or use cases?
Q: Yeah. Yeah, like you've got 100 people and 70 of them really use it every day and, 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.
A: 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 like it managed the core of work, and we see really high engagement across our customer base. Having said that, like being part of the flywheel motion, what we see is that you have a team using a core use case with 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 ones who are like in the main use case and the ones who are kind of like more invited and part of others' workflow, and that's how we grow over time.
Q: Okay. All right. Great. And then actually staying kind of on the product side. For mondayDB, can we -- could you guys just put the scalability in context? 100,000 items on board, 500,000 on a dashboard sounds like a lot. But can you compare that maybe to what those statistics look like under mondayDB 1.0 and then maybe even prior to mondayDB being rolled out last year?
A: Yeah. Jackson, this is Eran. So compared to mondayDB 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 stats in terms of scale of what the board is going to contain.
Q: Hey, guys. Thanks for taking my questions 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 do they compare to your expectations? And how to think through, again, in this kind of dicey macro environment that we seem to be in for this year?
A: 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 this strength is our growth retention is record levels. But we are 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 SMBs and across all segments.
Q: Sorry. Yeah, go ahead.
A: Just you also asked about the large deal that we closed, so maybe -- this is Eran. To maybe just to give you some more color on this, it's a European-based multinational healthcare company. They're actually an existing customer of monday since about 2020, four years now. They started -- the first use case was mostly focused on finance and R&D, managed workforce 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 closed now, they made a decision to consolidate on monday, and kind of basically standardize the whole company
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
