monday.com(MNDY) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics - Q4 2023 revenue was $202.6 million, up 35$729.7 million, up 41% YoY [108] - Q4 2023 net income was $33.7 million, up from$22.2 million in Q4 2022, and full-year 2023 net income was $94.9 million, compared to a loss of$33.4 million in 2022 [31] - Q4 2023 free cash flow was $55.4 million, with a free cash flow margin of 27$204.9 million, with a margin of 28% [126] - Q4 2023 gross margin was 90%, with expectations to remain in the high 80s range in the medium to long term [116] - Q1 2024 revenue guidance is $207 million to$211 million, representing 28% to 30% YoY growth, with full-year 2024 revenue expected to be $926 million to$932 million, up 27% to 28% YoY [10][109] Business Line Data and Key Metrics - The company upgraded its infrastructure with mondayDB, which improved Board performance by 5x, and is now entering phase 2.0 to address complex work scenarios [3] - The company launched monday code, a serverless environment for developers to host and run apps within the Work OS platform [30] - The company plans to roll out product bundles in 2024, including monday work canvas, work forms, CRM, dev, and work management [47][48] - The company is finalizing the rollout of its multi-product suite, with full exposure expected by the end of Q1 2024 [16] Market Data and Key Metrics - The company did not see any impact from the Middle East war on its business, as it operates globally [27] - The company has over 2,300 customers spending $50k+ annually, with a shift towards centralized buying decisions within organizations [49] - The company's largest customer has 25,000 seats, with growth driven by seat expansion and additional functionality purchases [73][90] Company Strategy and Industry Competition - The company is focused on enhancing its Work OS platform, expanding its enterprise presence, and delivering value to customers [115][125] - The company is investing in AI functionality across its products, with plans to democratize AI for customers [79][94] - The company faces competition in CRM and dev products, with 50$15 million to 20 million in revenue in 2024 [9] - The company held its first-ever Investor Day, showcasing its progress and future vision, with plans to make it an annual event [2][106] Q&A Summary Question: How is the company constructing its guidance given the underlying business health? - The company's guidance reflects a balance between base-case and lowercase scenarios, with NDR stabilization expected in H2 2024 [53] Question: What are the assumptions behind the price increase impact? - The company assumes a 15% to 75% impact from advancing the price increase by a quarter, with no unexpected customer reactions [14][36] Question: How is the company addressing large enterprise customers? - The company is seeing a record number of 50k+ customers and expects continued strength in large deals, with a focus on seat expansion and additional functionality [38][90] Question: What is the outlook for NDR and macroeconomic headwinds? - NDR declined slightly to 110% in Q4 2023, with stabilization expected in H2 2024, as macroeconomic headwinds persist [19][21] Question: How is the company evolving its go-to-market strategy? - The company plans to offer product bundles and specialize sales teams for CRM and dev products, with a focus on cross-selling [46][64] Question: What is the impact of the price increase on growth trajectory? - The company did not see a material change in ARR from the price increase, with a small impact on conversion rates for smaller customers [45] Question: How is the company monetizing AI functionality? - The company is still working on monetizing AI, with early feedback showing enthusiasm for AI in automation workflows [79][100] Question: What is the seasonality of free cash flow? - Free cash flow is impacted by bonus payments in Q2 and Q4, with 80% of customers on annual contracts contributing to stability [131]