monday.com Ltd. (NASDAQ:MNDY) Q2 2023 Earnings Call Transcript

Steve Enders: And then maybe for Eliran, 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 onetime in nature that maybe got pulled into — got pulled into the first half that would change some of the typical seasonality there?

Eliran Glazer: Yes. So with regards to — 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 ’23 as a whole, probably low twenties. We’re seeing a very healthy disciplined spending and improving efficiency that also contributed to that a very healthy top of funnel activity that contributes to the collection cycle. So all in all, we kind of increased our expectations for Q3 and the end of the year.

Operator: Next question comes from Arjun Bhatia with William Blair.

Arjun Bhatia: Congrats, guys, on a great quarter. I wanted to touch on some of the upmarket traction that you’re seeing. It’s clear 50,000 customers are strong. You’re rolling out product capabilities with DB and workflows that are going to be more catered to the enterprise. Have you thought just at a high level 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 just keep moving as high as possible into the enterprise?

Roy Mann: 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. Like a good example would be Monday DB. This opens up the door for a lot of new use cases and then those use cases we want probably more stuff. 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 into larger and larger companies all the time. And we are pushing towards that direction.

Eliran Glazer: Maybe, Arjun, just to add to Roy, this is Eliran. We have — at the end of last year, we had the 186,000 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 customers but existing customer base. And as part of this journey, customers that may be joined as SMB 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 with an existing customer base that our potential for growth.

Arjun Bhatia: 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 1,600 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? Is that an opportunity that still out there? Or have you seen those 8,000-plus customers adopt your work management platform already?