Derrick Wood: Congratulations as well. I guess just a follow-up to that, you did hire your first ever CRO in November. Just wanted to hear what the kind of impetus was to bring on a CRO and what changes you may be making on the go-to-market side?
Eran Zinman: Actually, Yoni Osherov was actually promoted from within the company. He was managing both the sales team and the marketing team. And we promoted him to be the CRO of the company, basically adding also the management of the customer success group and the customer support, in addition to our partners group. So, first of all, we’re really proud of Yoni. He’s been doing a phenomenal job. He basically himself created a whole sales team from scratch, and done a great job. And with this change within the company, we believe this will allow for better cooperation between the different team. This will drive greater efficiency, the teams working together and more optimized go-to-market, the fact that you have such a wide €“starting from the marketing team all the way to the sales and partners just gives so much energy to all the teams and much better collaboration.
So we’re already seeing the fruits of that. And I feel that, going into 2023, this will even create greater efficiency within those teams.
Derrick Wood: Just maybe a follow up. It sounds like from a macro standpoint, you’re not seeing a whole lot of headwind on the SMB side. It’s mainly just from slower expansion activity in the upmarket customers. We’ve heard more pressure from SMB from other companies. Why is it that it sounds like you’re seeing more stability on the SMB side?
Roy Mann: It’s really hard to say, but I feel that like SMBs want to consolidate on €“ have a product that solves more problems for them. That’s typically the case. And monday is obviously the tool of tools, and they can do so much with us. Having said that, the situation there is very stable, like you said, and we do see a very healthy top line demand that Eran mentioned with our performance marketing and getting new customers to join monday.
Operator: . The next question is from Fred Lee from Credit Suisse.
Fred Lee: Very nice quarter. I noticed R&D in dollar terms declined sequentially for the very first time. I was wondering if you could talk about how we should think about leverage going forward, especially as you add new features and roll out CRM’s existing customers and invest in new products, like monday DB. And then if you could also share year-end headcount R&D.
Eliran Glazer: With regards to R&D, Fred, so the fourth quarter is 18% for the year. It’s 16% for the fourth quarter. Reason why, it’s mainly due to the fact that we did some cost adjustments at the end of the year. There is the impact of the dollar/shekel exchange rate because the dollar was strong. And on this front, in Israel, with all the R&D based in Israel, you get benefits on their payroll, which is most of the cost for R&D. And when you think about going into 2023 and 2024, we are in accordance with our long term operating plan, which was around 22% to 24%. We believe it’s going to be on the lower side of it, around roughly 20%. We’re never very significant in terms of R&D as a percentage of revenue. And this is pretty much the kind of the ballpark, I would assume, that you will need to maintain.
Obviously, we will need to invest further on the platforms. And on Monday DB, as we said, already took that into account. But if we fail or we see that we need more resources and more headcount, we will obviously hire them.
Fred Lee: Also the year-end headcount, if you don’t mind, in R&D,
Eliran Glazer: The year-end headcount, the problem is €“ north of 300. I don’t remember the exact number.
Eran Zinman: Maybe just to add to Eliran, to give you a perspective, bulk majority of the hiring for 2023 is going to be focused on R&D resources. For us, this is the main part of the business. We plan to expand next year and put most of the efforts and the budget into it. So, we’re €“ continue and, like always, we’re going to deliver with execution also in 2023. We have very big plans.
Operator: The next question comes from Brent Thill from Jefferies.
Brent Thill: Just back on the guidance, I just wanted to better understand what you’re embedding for the year in terms of macro or SMB churn. It’s pretty drastic slowdown in growth. Is this just good old fashioned conservatism? Or are you baking in anything else to give yourself a little wiggle room?
Eliran Glazer: We believe this is going to be pretty much the same macroeconomy conditions that we see now. They will persist by the end of the year. We took it into account. We did also take into account some slowdown we see on NDR from enterprise account. It’s also baked into the numbers. Other than that, we believe that the guidance is consistent with what we see as of now. And also with improving overall efficiency on one hand, but the challenging macroeconomy, so we feel this is a number that we can achieve.
Brent Thill: And that enterprise slowdown, is that just as it relates to the macro having a hold on those customers slowing or is there something from internal execution that you’d like to do better there?
Eran Zinman: I feel it’s more about the macroenvironment and the fact that those enterprises are a bit more cautious going into 2023. Maybe slowing down hiring. Just as a reminder, the way we charge customers is per user. So the fact that they might be slowing down hiring might have an effect here. But, definitely, we’re also seeing some optimism and some good momentum as we started the year. So I think there’s some optimism baked into that going forward.
Operator: The next question is from Arjun Bhatia from William Blair.
