Steve Enders: Yes. Perfect. Thanks for taking the questions.
Operator: We’ll go next to Arjun Bhatia at William Blair.
Arjun Bhatia: Perfect. Thank you, guys. I wanted to ask on the new products. It looks like we’re set to roll those out to the entire customer base in Q1 here. Can you just give us a sense of how you’re expecting contribution and cross-selling from those solutions to take place throughout the year? And then, maybe one on the go-to-market as it relates to those? Do you anticipate at least as you get into the enterprise that there might be an overlay sales team or specialist sales teams that are just focused on selling CRM and dev or the whole suite versus and, you know, maybe just focusing entirely on work management, I guess? How do you see the go-to-market evolving as these products go out to the entire customer base here?
Roy Mann: Hi, Arjun. It’s Roy. So I’ll answer the first part of the pricing and how it looks like throughout the year. So the way we model it, we see that – we have monthlies and yearlies. So, the monthlies will be first – in the first like months or so, and then throughout the year as the renewal rate comes for yearly customers they will renew.
Eliran Glazer: Yes. And I think you specifically asked about the cross-sell between the Moto products. So the – just because the price increase, it was mostly for work management, we increase the price of the other products throughout the year. We shared in the previous quarter that we see a large amount of cross-sell being done between the products and we continue to see such momentum also in Q4 and going into Q1. So again, like it’s hard to model because it’s still small numbers, but we do expect this to be substantial going forward. Regarding the sales team architecture, so definitely we’re going to see teams specializing in each one of those products. So right now, it’s more of like one team during the sales process, but we’re starting to have more people specialized in selling CRM and monday dev. And over time, we’re going to see those teams scaling as we scale the revenue for each one of those products.
Arjun Bhatia: Okay. Perfect. That’s helpful. And then maybe one on the – actually how the growth impact might change. I know this year, it actually ended up being a pretty – a very strong year from a new customer adds perspective, and, you know, with the price increase layering in this year, how do you anticipate the growth trajectory might get impacted between new – net-new customer adds versus expansion – versus expansions with existing customers?
Roy Mann: Hi, it’s Roy. So we’ve AB tested that, of course, like the price increase. So we can say we didn’t see any material change to the ARR we get from the price increase. And we obviously – it’s a shift too – but there was, obviously, a small change in the conversion in the number of customers we get. But that’s like mostly smaller customers. So overall, we see that as a very positive effect long term as well.
Arjun Bhatia: All right. Perfect. Thank you, guys.
Operator: We’ll take our next question from DJ Hynes at Canaccord.
DJ Hynes: Hi, good morning guys. Maybe just building on the thread around go-to-market strategy. Can you talk about how you’re thinking through the strategy with product bundles? I’m just curious, as the portfolio continues to expand, where do you see the most linkage between solutions? What might that look like? When could you do something on this front? Any color there would be interesting.
Eran Zinman: Yes. Hi, DJ. It’s Eran. So right now, we don’t offer any bundles yet to our customers. They can buy each product individually and then over time purchase other products as well. But going forward, we’re definitely going to offer bundles to our customers. Bear in mind that we also have Monday work canvas and work forms in an addition to CRM, dev and work management. So going forward, we’re going to offer bundles maybe with a little bit of discount if you take two or three products and maybe offer that as like one solution. So for example, for companies focus on dev, we might offer monday dev. And in addition to that monday work management to manage the projects as part of manage just a dev team. So that’s something we’re probably going to start rolling out this year again. We’ll AB test that and we’ll get feedback from our sales team, but definitely something that we’re going to roll out in the next year – in this year, sorry.
DJ Hynes: Okay. Yes, understood. And then, as you look at your nearly 2,300 customers that spend 50k plus per year. In how many of those would you say there’s a centralized buying center versus, you know, maybe still a dependence on departmental level decisioning? I’m just trying to think about at what point or level of spend do customers start thinking about strategies for standardizing around monday and kind of what you can do to move that effort forward?
Eran Zinman: Yes. It’s Eran again. So I would say it’s mixed. Part of it is kind of more top-down decision where the company kind of buys monday’s throughout, not the whole company, but like a management decision. And some of it is more department based or VP based in a specific region within the company. But we’re seeing a shift. We’re seeing a shift where more and more monday becomes, you know, significant platform within the company, driven by management. So definitely there’s a shift towards that.
DJ Hynes: Perfect. Thank you guys for the color.
Operator: We’ll go next to Derrick Wood at TD Cowen.
Derrick Wood: Great. Thank you. At the Analyst Day, you guys guided for a base case of high 20%, low 30% in the medium term, and maybe it’s not the right way to look at it, but if I take the price increase impact out, you’re guiding for around 25%. So a tad below that kind of base case. Just wondering if you’d flag anything in terms of anything bringing that down, maybe you could comment on the SMB part of the market other companies have flagged incremental pressure there. And can you just comment on kind of what you’re seeing in the Middle East given the war?
Eliran Glazer: Yes. So, hi, it’s Eliran. With regards to the guidance, we said that mostly what’s going. There were two scenarios that we focused in. There was the base-case scenario and there was the lowercase scenario. And the thing that we focused on was the NDR. We said based on the – you know, behavior of the NDR, we’re going to kind of see what model fit better throughout the year. I think now we feel that it’s something in between. NDR, as we said, is going to probably stabilize at H2 of this year, and we took it into account as part of our guidance. So we embedded into the numbers. And this is the main reason for us to kind of assume this guidance. With regard to the Middle East war, we didn’t see any impact on our numbers. We are a global company. So nothing that, you know, we’re calling out until now. Since it’s actually began – begun, we actually didn’t see anything and, hopefully, we’re going to continue to see no impact on our business.
Derrick Wood: Great. Helpful color. And I’m curious if you guys have pricing going up, I guess, this week for existing customers. I know this is the first time you’ve done that. But you can often see pull-forward dynamics where people want to buy, you know, walk-in seat expansion before pricing goes up. Would you expect any kind of pull-forward in Q1? I’m just curious what you’re seeing in terms of buying behavior right now?
Eran Zinman: Yes, Derrick, it’s Eran. So far, as we said, it’s starting to roll out next week, i.e., taking into effect. So far in terms of, you know, churn and downgrade, we saw some numbers pretty much in line with our expectations. We didn’t – the reactions from customers were overall good. We didn’t get any negative reactions. Overall, the reception of customers was good. Again, this is the first time we’ve ever done it, and not just as a public company, but ever. So we still – we also want to be cautious and be aware that we’re not aware the whole dynamic of how this will roll out. So maybe being more a bit more cautious here at the company. But overall, so far the signals look good. And I think after Q1, we’ll have a better kind understanding of the dynamic and how this will roll out throughout the rest of the year.
Eliran Glazer: Yes. And – hi, there. This is Eliran. Maybe I will add that it takes a while for it to layer into the model simply because they’re effective when the agreements are signed, you know, upon renewals, and that happens over the course of time for the annual multi-year agreements or annual contracts. So this is why we are not really, you know, can’t anticipate all the behavior. But as Eran said, so far, signs are good.
Derrick Wood: Got it. Okay. Thank you.
Operator: We’ll move next to Brent Thill at Jefferies.
Brent Thill: Thanks. When you look at the results relative to your guide, Q4 was the lowest magnitude beat you’ve had as a public company. And I’m just curious, was there anything in Q4 that didn’t meet your expectations? Or are we just simply going through a cycle of – you’re still beating, but the magnitude is coming down and that’s kind of what you’re anticipating in the guide. I think everyone’s trying to kind of reconcile what happened in Q4, and then, obviously, it seems like that’s leading into the more conservative guide for this year.
Eliran Glazer: Yes. Hi, Brent. It’s Eliran. Yes, I would say it’s the latter. It’s the macroeconomic headwinds that are still – do still exist. They didn’t change from what we’ve seen in the past. I think our customers are still cautious with their spend. And that is why probably there was an impact on our Q4 results. Also going into this macroeconomic situation also going into the beginning of this year.
Brent Thill: Okay. And just real quick on the Q1 margin guide you exited at 10%, you’re guiding 4% to 6%. Is this just a heavier upfront load? Or is there anything changing here as it relates to the trajectory of margin?
Eliran Glazer: Sure. So when we did the Investor Day, we said that our number one focus for 2024 is going to be increasing top line throughout the investment. There is some seasonality, obviously, because Q1, you always put more on the performance marketing because this impacts the entire year. But we said that the focus is going to be on top line and we are not going to improve operating margin in the way we did in the past. So I would have expected to improve, but it’s just in line with what we have said.
Brent Thill: Great. Thanks.
