monday.com Ltd. Q2 FY2023 Earnings Call

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to monday.com's Second Quarter Fiscal Year 2023 Earnings Conference Call. I would like to turn the call over to monday.com's Director of Investor Relations, Mr. Byron Stephen. Please go ahead.

Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for monday.com's second quarter fiscal year 2023. Joining me today are Roy Mann and Eran Zinman, co-CEOs of monday.com, and Eliran Glazer, monday.com's CFO. We released our results for the second quarter earlier today. You can find our quarterly shareholder letter, along with our investor presentation and a replay of today's webcast under the News & Events section of our IR website at ir.monday.com. Certain statements made on the call today will be forward-looking statements which reflect management's best judgment based on the currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release for more information on the specific factors that could cause actual results to differ materially from our forward-looking statements. Additionally, non-GAAP financial measures will be discussed on the call. Reconciliations to the most directly comparable GAAP financial measures are available in the earnings release and the earnings presentation for today's call which are posted on our Investor Relations website. Now let me turn the call over to Roy.

Thank you, Byron, and thank you, everyone, for joining us today. In the second quarter, we continued to make significant strides in executing our long-term strategy, delivering exceptional results. Revenue grew 42% as demand from our customers remains healthy. We continue to demonstrate improved operating efficiency and cash generation, reflecting our ongoing commitment to driving sustainable growth. Eliran will talk you through our financial performance in more detail. This quarter, we are thrilled to announce the completion and release of Monday DB 1.0 to all our accounts. This is the initial version of our brand-new infrastructure for the Work OS platform. With Monday DB, customers are already experiencing larger and more complex boards loading five times faster, enabling them to work more efficiently and handle data-intensive and complicated workflows. Future releases of Monday DB will provide even more speed, enhancements, scalability, and functionality. In Q2, we also launched our AI assistant and introduced several new AI capabilities, including automated desk generation, formula builder, email composition, and content generation. Additionally, we opened our AI assistant infrastructure to external developers and hosted a global AI Hackathon, which generated tremendous interest with over 1,600 registrants and more than 40 AI apps developed. The Hackathon showcased the enthusiasm and talent within our monday.com community. We have also been working to optimize our infrastructure and interface to enhance the user experience and reinforce a robust multiproduct ecosystem. We see an extraordinary opportunity to enhance cross-selling efforts, strengthen inter-department organizational connections, and solidify monday.com as a vital partner across all business use cases. Let me now turn it over to Eran to walk you through some of our recent innovation efforts.

Thank you, Roy. As Roy mentioned, we remain focused on our multiproduct strategy and ensuring that our products can successfully enable cross-functional collaboration for our customers. Monday Cell CRM is now available to approximately half of our customers, and we continue to see strong demand for the product. We are committed to continuously elevating our Cell CRM product with best-in-class features. This quarter, we introduced new mass emailing capabilities, allowing users to reach out to multiple contacts through Monday Cell CRM. In addition, we've revamped and upgraded our mobile item page, making it easier than ever to access and update information on the go. We also recently announced that Monday Dev successfully transitioned out of beta. Initial demand for the product has been strong, and Monday Dev has already earned a place as one of the top bug tracking softwares on G2. As we gradually roll out Monday Cell CRM and Monday Dev to our existing customer base, we see an incredible opportunity to foster cross-selling. Since the launch of our product suite in 2022, we've seen an impressive 1,656 accounts initially begin with our work management product and later expand their portfolio with an additional product. This significant expansion underscores the value of our offering and the trust our customers have placed in us. Separately, we are excited to announce the introduction of the Monday workflows add-on. Monday workflows offer a fully customizable and visually intuitive interface, empowering users to build workflows with ease. By utilizing drag-and-drop blocks, Monday workflows simplify the entire workflow creation process, making it accessible to users of all levels of technical expertise. The new Monday workflows are currently open to 20% of our customers and will be gradually open to all customers by the end of Q3. With that, let me turn it back over to Roy.

Thank you, Eran. As we continue to grow, we are focused on ensuring we have the right team in place to lead monday.com into the future. We took steps in the quarter to strengthen our management team with the promotion of two senior executives. Daniel Lereya was appointed as the first Chief Product and Technology Officer, and Shiran Nawi was appointed as our Chief People and Legal Officer. Both Daniel and Shiran have served as outstanding senior leaders for many years here at monday.com, and we are confident that they will excel in these new roles. Finally, we are excited to announce that this year's New York City Elevate Conference on December 6 will feature a segment exclusively for our shareholders. Mark your calendars and join us for our first-ever Investor Day as we showcase our exciting journey ahead. We are incredibly proud of what the monday.com team accomplished this quarter. We are just scratching the surface of our potential, and we are excited about the opportunities to continue to generate sustainable long-term value for our shareholders. With that, I'll turn it over to Eliran to cover our financial performance and guidance.

Thank you to everyone for joining our call. Today, I'll review our second-quarter fiscal 2023 results in detail and provide updated guidance. Q2 2023 was another strong quarter driven by increasing customer demand for the monday.com Work OS platform and product suite. Total revenue in Q2 came in at $175.7 million, up 42% from the year-ago quarter. Excluding the impact of foreign exchange, revenue grew 43% year-over-year. Our overall net dollar retention rate declined in Q2, reflecting a continued slowdown in customer seat expansion amid the challenging macroeconomic environment. We continue to expect some pressure on net dollar retention in the second half of fiscal year 2023, and our guidance now assumes a full-year net dollar retention slightly below 110%. As a reminder, our net dollar retention is a trailing four-quarter weighted average calculation. Regarding the other financial metrics disclosed, unless otherwise noted, I will be referencing non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financials in our earnings release. Second-quarter gross margin was 19%. In the medium to long term, we continue to expect gross margins to be in the high 80s range. Research and development expense was $27.9 million or 16% of revenue compared to 19% in 2022. For fiscal year 2023, we anticipate that R&D expenses as a percentage of revenue will be in the high teens as we build our product suite and scale our Work OS platform, both horizontally and vertically. Sales and marketing expenses were $98.8 million or 56% of revenue compared to 70% in Q2 2022. General and administrative expenses were $14.7 million or 8% of revenue compared to 12% in Q2 2022. Net income was $21 million, up from a loss of $14.9 million in Q2 2022. Diluted net income per share was $0.41 based on 51.2 million fully diluted shares outstanding. As of the end of the quarter, total employee headcount was 1,646, an increase of 64 employees since Q1 2023. We expect to continue hiring throughout the course of fiscal year 2023 with a focus on our R&D product and sales teams as we build out our platform and product suite. Moving on to the balance sheet and cash flow, we ended the quarter with $989.4 million in cash and cash equivalents, up from $935.6 million at the end of Q1 2023. Free cash flow for Q2 was $45.9 million, and free cash flow margin, defined as free cash flow as a percentage of revenue, was 26%. We continue to expect to report positive free cash flow on a consistent quarterly basis moving forward and to achieve our third consecutive year of being free cash flow positive in fiscal year 2023. Free cash flow is defined as net cash from operating activities, less cash used for property and equipment and capitalized software costs. Now let's turn to our updated outlook for fiscal year 2023. For the third quarter of fiscal year 2023, we expect our revenue to be in the range of $181 million to $183 million, representing growth of 32% to 34% year-over-year. We expect non-GAAP operating income of $4 million to $6 million and an operating margin of 2% to 3%. For the full year of 2023, we now expect revenue to be in the range of $713 million to $717 million, representing growth of 37% to 38% year-over-year. We expect full-year non-GAAP operating income of $24 million to $28 million and an operating margin of 2% to 4%. I'll now turn it over to the operator for your questions.

Your first question comes from Kash Rangan with Goldman Sachs. Your line is open.

Congratulations on the superb quarter, Roy, Eran, and Eliran. Glad to see the growth and the free cash flow margin expansion here. I'm curious to get your thoughts on the DB Work OS and also the database product. What is the unique differentiation that Monday has for these products within its customer base? And if these products are successful, should we expect the net expansion rate to stabilize at some point? When do you think we will see the bottom in that? Because obviously, if you've got installed base potential for these two products, we should start to see a turn in that metric. So just wondering if you have any thoughts on that.

So just to repeat the first part of your question, you were asking about Monday DB and Monday Dev?

The differentiation of these two products within your base versus the competition?

Yes. So Monday DB, Monday database is basically, it's not a product, but a new set of capabilities that we released to all of our accounts and users. You can think about it as an infrastructure change, and the impact of that, we just announced that we finished the deployment of version 1.0, which is ahead of schedule and a major milestone for us as a company. This new infrastructure allows customers to dramatically scale on top of our platform in terms of the size of boards, size of dashboards, automations, and integrations. We think that this will lead to enterprise customers being able to dramatically scale their operations and accounts, add more users, more use cases, which will ultimately lead to more net expansion, more usage, and more attention among our larger customers. Monday Dev is our product that's competing in the Dev industry, allowing developers and product managers and designers to work effectively on agile sprints and manage R&D operations. This product is going very nicely. We just launched out of beta, as we mentioned. We see some good numbers and momentum, and we believe this is a very strategic industry for us.

Yes, it's Roy. I can add that like the differentiator we see for Dev and all our products, also CRM and the work management, is the fact that we are in a platform. The products are built on top of the platform, which allows our customers to shape the solution to whatever they see fit and adapt to how their organization works. We see this as a huge advantage also on deals and with customers when we talk with them, it's a major factor that it is built on top of the Work OS.

And I will address your question regarding net dollar retention.

Yes.

I wanted to just clarify about our net dollar retention, but please follow up if you have additional questions.

No. I just wanted to get your thoughts on what is lacking in the marketplace for the developer community that you believe you could address. That was what I was curious about.

I think there is one major player within this market. What we see is that it's very geared towards developers. When we look at the R&D teams, they are comprised also of product people and designers, and then you have the rest of the company that you want to connect to. With Monday, our customers feel they can customize it better, have a workflow where everyone takes part more, and it's also more connected to other parts of the organization and not just the developers.

I will address your question regarding net dollar retention. As we said, we do continue to expect moderate pressure on net dollar retention throughout the remainder of the year, and by the way, we took that into account in our guidance. We assume full year net dollar retention to be slightly below 110%. To your question, when we expect it to stabilize, already going into July, we see signs of stabilization, and we expect it to level off by the end of the year. Just as a reminder, because it's a weighted four-quarter average, there is a lagging effect. It might also be worth mentioning that the gross retention on the same kind of metric remains stable. Even though we saw some net dollar retention decline, it was offset by strong customer acquisition.

Our next question comes from Pinjalim Bora with JPMorgan. Your line is open.

I wanted to ask you about the platform itself as you were talking in the previous question, mainly about the marketplace. It seems like the percentage of apps that are being monetized are kind of going up steadily. I see it about 45%. You recently launched the API version. One of your partners said it could accelerate third-party development. Do you think the marketplace starts emerging as a material growth driver in 2024?

Pinjalim, it's Roy. It's hard to say how much material it will be because we have our core product, the CRM that does the work management, which is the main growth driver. We do believe that the marketplace will help us close larger deals. There are many partners working on it, making each of those products more complete and suited for long-term solutions. We put a lot of emphasis on the marketplace and a lot of investment in the ecosystem. I think it's a longer-term play rather than just focusing on immediate revenue for next year.

Just one follow-up on the macro environment. It seems like that 110% earlier on you're expecting it to stabilize at about 110% seems like it's a little bit of a tick down. You're now saying slightly below. What are you seeing in the macro? Has that changed a bit? You also said that it's stabilized? I'm a little bit confused on maybe what you’re seeing in the macro environment, help us tease through that? And maybe if you can talk about the top of the funnel in July and August? That will help.

Demand development hasn't really changed from what we mentioned in the prior quarter, Pinjalim. We still see some pressure with the new customers' expansion, primarily with regards to decision-makers being brought to the table and longer sales cycles. So there wasn't a significant change regarding the pressure on net dollar retention. We also called that out in prior quarters, and we stated that it's going to be slightly below 110%. However, we do see some stabilization with the net dollar retention going into July, as it is getting flat. So by the end of the year, due to the lagging effect of the four trailing quarters, it will continue, but we believe it will flatten by then. Hopefully, next year, we will see a change in the trend.

Any comments on the top of the funnel demand at this point in July and August?

Top funnel activity remains healthy. We still see a very healthy stream of new customers joining monday.com, also considering that we now have CRM and Monday Dev is out of beta; this definitely contributes to the influx of new customers.

Next question comes from Jackson Ader with MoffettNathanson.

First one on the commentary from Monday DB. Are there any kind of quantitative metrics to report in terms of whether these faster load times on big boards are driving either increased usage or adoption or seat count or something at some of your largest customers?

Yes, Jackson. This is Eran. In terms of the impact, Monday has already shown about five times the performance in terms of loading large boards. As we release additional versions, we'll see more impact on other parts of the platform. Customers are providing great feedback regarding enhanced performance and capability. We expect this to have a longer-term effect on customer expansion and usage. However, it's challenging to quantify it exactly right now.

And then in terms of the net retention rate, it kind of keeps coming back to it, but I'm just curious whether there's any signs of turning around that we talked about in July. Any particular segment of the market, whether it's enterprise or 10-plus users or small end that seem to be stabilizing ahead of time and might have a little bit more lift as we head into next year?

Jackson, it's Eliran. It's pretty broad-based. We're seeing, on a month-on-month basis, first of all, the decline is becoming more moderate across all segments. I wouldn't call out any specific segment but the improvement has been encouraging across all segments.

Next question comes from Steve Enders with Citi.

I do want to ask on the CRM side and the success of the cross-sell back into the customer base at this point. I guess as we think about that and look at those numbers, what's the typical customer journey like going from the platform to the CRM? And is it for kind of net new use cases? Or is it customers converting over from maybe already using some of those existing capabilities for CRM-like use cases?

Steve, this is Eran. As we mentioned, over 1,600 accounts that were using work management adopted the CRM product in addition to that. It's not that they initially bought those two products, but accounts that were already using Monday, sometimes for a few months and sometimes over a year, decided to explore our product offering and then decided to buy the CRM product. In most cases, the CRM users were in addition to those using the work management platform. You see salespeople and managers from the sales team buy additional seats for the CRM product. This is encouraging to see other departments joining and having large deployments within customers. Often with new teams, sometimes they were already using us for work management. We didn’t put much effort yet into promoting the product within the platform or any promotions, but we’re very encouraged with the numbers, and this is really connected to our strategy of selling multiple products to different departments within the organization.

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 linearity throughout the rest of the year? And anything one-time in nature that maybe got pulled into the first half that would change some of the typical seasonality there?

Yes, so with regards to free cash flow, when we're looking at Q3, we're probably looking at high teens, and we anticipate fiscal year 2023 as a whole, probably low twenties. We're seeing very healthy, disciplined spending and improving efficiency that also contributed to a very healthy top-of-funnel activity that contributes to the collection cycle. Overall, we increased our expectations for Q3 and the end of the year.

Next question comes from Arjun Bhatia with William Blair.

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? 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?

Thank you for the question. It's Roy. The journey going upmarket has been ongoing for a while now. With every new feature and capabilities rolled out, we see strong demand for even deeper and newer ones. A good example would be Monday DB, which opens up many new use cases. We do not see ourselves as limiting the customer base to an exact size. Still, it will be a journey that takes time to reach larger and larger companies, and we are pushing towards that direction.

Arjun, just to add to Roy, at the end of last year, we had 186,000 customers. Adding more capabilities and functionalities allows us to achieve better retention and increased monetization of both new and existing customers. As part of this journey, customers that may have joined as SMBs or mid-market can become enterprise accounts in the following year. We see both new customers and expansion within our existing customer base as potential growth opportunities.

And then I want to touch on the new products again because it seems you're gaining a lot of adoption on Dev and CRM, both from new customers and cross-sell into the base. If I look at the 1,600 customers 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. So the question is, how do you think about Dev and CRM becoming a top-of-funnel landing point for customers and then cross-sell in the other direction into the work management platform? Is that an opportunity that is still out there? Or have you seen those 8,000-plus customers adopt your work management platform already?

Thanks, Arjun. You made a great point. Indeed, those products are newer than the work management product. We focus primarily on how existing customers can move from work management to CRM or Dev. However, we’re also attentive to making those products major go-to-market offerings. Going forward, we will see accounts transitioning from CRM to work management as well.

Next question comes from Derrick Wood with TD Cowen.

You guys mentioned that you launched the AI assistant this quarter. Can you just talk about what the initial interest has been? And then just remind us how you’re thinking about the approach to monetizing AI down the road?

We have taken several layers of approach to AI, where we started with adding a layer to the platform that you can add any AI capabilities you want to any section of the product. We released a few examples for it, like formula builder and autocomplete features. The reaction from the marketplace, especially from developers, was amazing; we had around 1,600 people sign up for the hackathon, and many apps are being built right now. We see a lot of customer interest in these areas, and we are truly committed to AI. We plan to add more capabilities going forward, as we believe it is essential for empowering our users in managing their businesses.

Got it, that’s helpful. I guess just staying on the product discussion. Now that you’re through 1.0 of Monday DB, what’s the next phase, I guess, the 2.0? Can you give us some color as to what to expect out of 2.0 and what that timeline may look like?

Yes. First, we have a complete timeline on our website, which we also share with our customers. Overall, the next version, Monday DB 1.1, is going to be released in Q4 this year. The focus will be on large dashboards. Just as a reminder, dashboards contain data from multiple boards, so this will undergo a radical transformation in terms of performance and capability. We plan for another minor release of Monday DB 1.2, focusing on our API and enhancing filter and sort aggregation. Next year, in 2024, we're preparing for a major release of Monday DB 2.0, which will be a game-changer for accommodating larger enterprise accounts. We have many releases in the pipeline, but having Monday DB 1.0 already released is significant since now all customers are using a new engine, making it easier to deliver incremental releases to our customers.

Next question comes from Brent Thill with Jefferies.

The magnitude of the beat was great. You actually raised the guidance more than the beat. I'm just curious if you could maybe characterize the strength that you're seeing? Where you're seeing it to raise the guidance more than you actually saw a flow-through? And I had a quick follow-up.

Yes. Just a well reminder, we beat revenue by $7 million, and with the help of a strong dollar versus other currencies, this contributed positively. It's also essential to note that we are healthy on our cost side. The combination of our new products and the momentum we see, together with our disciplined and efficient spending as part of our playbook, gives us confidence to increase the guidance for the end of the year and ensures we achieve these numbers.

And when you think about CRM, the type of price uplift that you're seeing in some of these deals, is there an average? Or when you think about the monetization, ultimately, what do you think this looks like in terms of the additive nature to what you're seeing already in the core platform?

Yes, Brent, this is Eran. So I think it goes two ways. First, we see new users utilizing additional products, which generates additional seats that we didn’t have before. In addition to that, the CRM product has higher pricing per seat, and we will experiment with that as we’re still below the market average. So there's more room to increase those prices. I believe both the individual pricing for the product and the potential for more seats within a company represent a major upside for improving the average annual contract value of our customers.

Next question comes from George Iwanyc with Oppenheimer.

Maybe digging into the competitive environment, are you seeing any differences in use case expansion head-to-head competition? Any signs of tool consolidation across departments or divisions?

I think it aligns with what we mentioned before. As a reminder, 70% of our deals encounter no competition at all. I do want to mention that we see new competitors in the CRM market, including Zoho CRM, HubSpot, and a bit of Salesforce, and in the Dev space, we are seeing new competitors. While we’re facing some new audiences, we haven't yet seen any significant impacts on our business.

And maybe in CRM, when a customer is already using Salesforce, are you seeing your deployment in parallel with Salesforce? Or do you see some of the opportunity actually with smaller customers to take over the overall account?

We definitely see ourselves alongside Salesforce, and we have many of those deals. It's our number one integration, with Monday and Salesforce collaborating on multiple deals. Our strategy when approaching larger companies is to be a complement to Salesforce, connecting the rest of the organization to the CRM instead of seeking to displace them altogether. In the small to mid-market segment, however, we do put ourselves in competition with other CRMs that have evolved from very simple or rigid versions. When they look upwards, they see us as one of the only solutions they can actually customize to their specific needs, and that customization is a significant part of CRM usability.

Next question comes from DJ Hynes with Canaccord Genuity.

Just one for me. Roy and Eran, how do you think about the opportunity to revisit product packaging to kind of incentivize multiproduct lands as the scope of the platform continues to expand?

You touched on a great point. It is something we're currently discussing in terms of our future strategy. One of the options we have as we expand our product offerings is the ability to package multiple products into a product suite. By doing this, we can offer a cohesive business solution, appealing to senior management within companies. This approach is likely to drive more enterprise deals and facilitate top-down sales, so we are definitely looking into it.

Next question comes from Andrew DeGasperi with Berenberg.

Maybe first on Monday Dev. Just noticed you have just under 800 customers. Wondering if the ramp-up for this product could be similar to CRM in terms of where it was at this stage? Or should we expect a different pace? And then I have a follow-up.

It's still early days, but we're very pleased with the traction and what we're seeing so far with the numbers. It's challenging to predict whether it will ramp up faster or slower than CRM, but overall, we are happy with the growth compared to our benchmarks. We are receiving great feedback and momentum from customers, indicating significant potential for further expansion within our organization. Customers are not solely using the product for development teams, but we are seeing product teams, designers, and analysts utilizing it as well.

Could you elaborate on the performance marketing side and what you observed in the market this quarter? Was this a unique situation, and do we anticipate any changes in the second half of the year?

Sure, Andrew. Our marketing environment has been largely stable. We did not see anything materially change that we should highlight. Some competitors have resumed performance marketing spend to acquire new customers, but it doesn’t significantly impact prices. There has been some uptick, but nothing material is being seen.

Next question comes from Scott Berg with Needham & Company.

This is Rob Marelli on for Scott Berg. I got disconnected a little bit, so apologies if some of these questions have already been asked. But with the release of Monday DB and future releases coming, are you anticipating these will enable you to target and offer different use cases? Hearing discussions around consolidation trends within the cloud management space, have you noticed any shifts in your top of funnel or with existing customer discussions?

For the first part of your question, we believe that with the release of Monday DB 1.0, there's significant potential to go upmarket and serve larger enterprise deals. We have received great feedback from customers, and we witness them scaling their operations using this new infrastructure. We plan to release additional minor and major versions soon. Regarding your second question on customer behavior, we haven't noticed any change. Some customers have consolidated multiple products into the Monday platform, but nothing particularly significant. We also don’t see customers discontinuing use of Monday due to consolidation. It’s worth mentioning that churn has been very stable, and downgraded accounts remain steady, so overall, we do not see any movement on that front.

Next question comes from Jason Celino with KeyBanc.

Eran, I think you mentioned in your prepared remarks that you're doing faster cross-sell. I didn't quite hear in your response to some of the other questions on this topic. Are you expanding here with the help of sales reps or marketing efforts? And if not, when might it make sense to adopt a more forward approach?

Yes, Jason, it's Eran. We see both aspects at work. We observe customers extending through what we call a 'no-touch' method, where they discover and purchase new products themselves. Additionally, our sales teams are actively reaching out to customers with proposals for other products. We are successfully landing larger deals with more potential for expansion. However, we plan to continue optimizing the sales funnel to enhance cross-selling in other accounts.

Great. And then, Eliran, just a quick clarification question. I know we touched on your comments on July and you're seeing some signs of stabilization, but curious about some of the details if you can elaborate? Is this a reflection of down-sells, flowing seat optimizations, or slower down-tiering? Just curious about those subtleties.

Regarding the recovery, these past 1.5 years with the challenging macroeconomic environment have shown a decline that is now stabilizing. We analyze our net dollar retention as a trailing 12-month and weighted average approach. Now we are seeing a pickup compared to last year. Positive signs are emerging from the good cohorts that joined at the end of last year, leading to stabilization in net dollar retention, which we will not yet call a trend, but we are observing encouraging signs.

Next question comes from Robert Simmons with D.A. Davidson.

I was wondering in the marketplace, are there any interesting or surprising trends that you're seeing there, maybe areas with more customer interest than you had expected that you might pull into the core platform or product suite?

Yes, can you repeat the first part of your question? There seemed to be a breakup.

Yes, in the marketplace. I'm wondering about interesting or surprising trends that you're seeing and how that might inform your future product plans?

We see good traction with our marketplace, and some apps are proving more popular than others. Most applications we’re seeing right now are additional capabilities on top of the Monday platform to finalize our use cases. This definitely opens up opportunities in terms of added features that could be integrated into the platform or considerations regarding potential acquisitions, or extending our capabilities as a platform, but nothing specific I can outline at the moment.

There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. You may now disconnect.