Operator:
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 the monday.com fourth quarter fiscal year 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star one. I would now like to turn the conference over to Byron Stephen, Vice President of Investor Relations. You may begin.

Byron Stephen:
Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for monday.com’s fourth quarter and fiscal year 2024. Joining me today are Roy Mann and Eran Zinman, Co-CEOs of monday.com, and Eliran Glazer, monday.com CFO. We released our results for the fourth quarter and fiscal 2024 earlier today. You can find our quarterly shareholder letter, along with our investor presentation and a replay of today's webcast under the News and 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 currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our 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. Now, let me turn the call over to Roy.

Roy Mann:
Thank you, Byron, and thank you, everyone, for joining us today. We close out Q4 on a high note, capping off an incredible year. 2024 has been a period of transformation and growth with our business reaching new heights across every area. We've made substantial progress in solidifying our market leadership while driving innovation to meet the evolving needs of our customers. A major milestone this year was reaching $1 billion in annual recurring revenue, underscoring the strength of our WorkOS platform and the increasing demand for our solutions. Our financial performance was equally exceptional in 2024. We achieved record operating margins and delivered record free cash flow, reflecting both the efficiency of our business and the scalability of our model. Total revenue in Q4 came in at $268 million, up 32% from a year-ago quarter and $972 million in FY 2024, up 33% from the prior year. On the product front, we continue to make considerable progress in our multiproduct strategy. Monday's CRM has exceeded expectations, and we added a record number of net new accounts for both CRM and dev during the year. We were also proud to be recognized as the leader in the Gartner Magic Quadrant in three different categories. This recognition further validates our strategy and our continued commitment to delivering value to our customers. In 2024, we made significant strides in our AI advancements, unveiling several new capabilities, including AI blocks. Since AI was integrated into the Monday platform, users have performed approximately 70 million AI actions. This ongoing progress highlights our commitment to enhancing the user experience and driving greater efficiency through innovating AI solutions. One of the most significant milestones of 2024 was our strategic expansion into the enterprise market. We successfully grew our largest seat count to 80,000 seats, signaling strong adoption and deepening enterprise customer engagement. All this enterprise expansion would not have been possible without MondayDB, our data architecture. In 2024, we completed the latest phase of MondayDB 2.0, enhancing the platform's scalability to support larger, more complex use cases. As we look ahead to 2025, we remain focused on continuing this momentum, building on our achievement and further expanding our reach and impact with a strong foundation in place. We are excited for the opportunities to come. Let me now turn it over to Eran to walk you through some of the product highlights this quarter.

Eran Zinman:
Thank you, Roy. We're excited to announce that Monday Service is now officially available to all customers. Monday Service is an AI-first enterprise service management solution. It helps service teams deliver exceptional support faster through smart AI-powered automations. Initial customer demand has been very strong, with Monday Service already showing the highest cross-sell of our new products and the highest ACV in the entire monday.com product suite. As Roy mentioned, we've been very busy on the AI front. To make AI more accessible, we've introduced a flexible consumption-based pricing model for AI blocks, offering a baseline level of free usage for all plans. Organizations with larger AI needs can purchase additional usage at different levels. In 2025, our AI strategy will be focused on three main areas: AI blocks, product power-ups, and digital workforce. AI blocks will be expanded to provide more advanced ways to automate tasks. Through product power-ups, AI will be deeply integrated into each product to address specific user needs. Finally, the digital workforce will include AI agents like Monday Expert, Deal Facilitator, and Service Analyzer, which will offer actionable insights and streamline processes for users. Looking ahead to 2025, we have a lot to be excited about. Our momentum is stronger than ever, positioning us for continued growth and innovation. The success this year would not have been possible without the dedication and talent of the monday.com team. In 2024, we increased our workforce by 35%, bringing our total employee count to over 2,500, and expect strong hiring in 2025. As we move forward, we remain focused on investing in our people, delivering exceptional value to our customers, and driving sustainable long-term growth for our shareholders. With that, I'll now turn over to Eliran to cover our financials and guidance.

Eliran Glazer:
Thank you, Eran, and thank you to everyone for joining our call. Today, I will review our fourth quarter and full year 2024 results in detail and provide initial fiscal year 2025 guidance. As Roy mentioned, 2024 was an exceptionally strong year. Total revenue in Q4 came in at $268 million, up 32% from the year-ago quarter, and $972 million in fiscal year 2024, up 32% from the prior year. Overall NDR increased to 112% in Q4. We expect NDR to remain stable throughout 2025. As a reminder, our NDR is a trailing four-quarter weighted average calculation. The remainder of the financial metrics disclosed, unless otherwise noted, will be referencing non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financials in our earnings release. Fourth quarter gross margin was 89%. In the medium to long term, we continue to expect gross margin to remain in the high range. Research and development expense was $48.1 million in Q4 or 18% of revenue, up from 16% in the year-ago quarter, and $162.7 million in fiscal year 2024, or 17% of revenue, up from 16% in the prior year. Sales and marketing expense was $127.8 million in Q4, or 48% of revenue, compared to 54% in the year-ago quarter, and $499.7 million in fiscal year 2024, or 51% of revenue, compared to 57% in the prior year. Net income was $57.3 million in Q4 2024, up from $33.7 million in Q4 2023. For fiscal year 2024, net income was $183.3 million, up from $94.9 million. Diluted net income per share was $1.08 in Q4 and $3.50 in fiscal year 2024, based on 52.9 million fully diluted shares outstanding, respectively. Total employee count was 2,508, an increase of 203 employees since Q3. We expect to grow headcount by approximately 30% in fiscal year 2025, with heavier investment in the first half of the year as we continue to ramp up hiring for our sales, R&D, and product teams. Moving on to the balance sheet and cash flow. We ended the quarter with $1.41 billion in cash and cash equivalents, up from $1.34 billion at the end of Q3. Free cash flow for Q4 was $72.7 million, and free cash flow margin, defined as free cash flow as a percentage of revenue, was 27%. In fiscal year 2024, free cash flow was $295.8 million, and free cash flow margin was 30%. We remain on target to meet our Investor Day goal of generating over $1 billion in free cash flow from fiscal year 2023 to fiscal year 2026. Free cash flow is defined as net cash from operating activities less cash used for property and equipment and capitalized software cost. Now let's turn to our updated outlook for fiscal year 2025. For the first quarter of fiscal year 2025, we expect our revenue to be in the range of $274 million to $276 million, representing growth of 26% to 27% year over year. We expect non-GAAP operating income of $25 million to $27 million and an operating margin of 9% to 10%. For the full year 2025, we expect revenue to be in the range of $1.208 billion to $1.221 billion, representing growth of 24% to 26% year over year. This forecast assumes a negative impact from FX of 100 to 200 basis points. We expect full-year non-GAAP operating income of $134 million to $142 million and an operating margin of 11% to 12%. We expect full-year free cash flow of $300 million to $308 million and free cash flow margin of approximately 25%. Let me now turn it over to the operator for your questions.

Operator:
Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow-up. Again, press star one to join the queue. And our first question comes from the line of Pinjalim Bora with JPMorgan. Your line is open.

Pinjalim Bora:
Oh, great. Hey, thank you for taking the questions, and congrats on a strong quarter. I want to start with AI. It seems like your AI capabilities are seeing really strong momentum. You introduced some AI credits. Maybe help us understand how the AI credits are supposed to work. It seems like 500 credits are in the plan. How is that going to be consumed? Is that per AI action? How are you defining an action? And if somebody wants to buy more, what does that pricing look like?

Roy Mann:
Hi, it's Roy. Thank you for the question. So what we wanted to do with this different pricing of consumption is that everyone can use it, like all our customer base. Essentially, we have a starting plan, like you said, with 500 credits. An action is everything that AI does within our platform, like a summary or doing any kind of action on the board. Essentially, if you create a workflow, you can use a lot of AI actions to build a complete workflow and really automate things in a way you couldn't before. As you progress and use it more and more, in a consumption model, we have different plans that you can purchase more actions.

Pinjalim Bora:
Yeah, understood. Okay. Eliran, one question on guidance here. The constant currency guide seems very strong, seems like about 26% or over 26% at the high end. Can you talk about some of those assumptions? Because you were seeing a little bit of choppiness around macro in Europe. How did that progress? What are you assuming for the guide? What are you assuming on pricing benefit? And then lastly, how should we think of contribution from kind of non-core, non-CWM products for 2025? Thank you.

Eliran Glazer:
Sure, Pinjalim. So regarding the 2025 guidance, what we took into account is, first of all, we saw consistent demand trends across all regions. The US demand is very healthy. The rest of the world, including Europe and the Middle East, is stabilizing compared to what we have seen in November. We took into account the fact that the NDR remained stable at 112%. You know, we expected a negative FX impact as you've stated because of geopolitical and strong dollar versus the other currencies. Sixty-five percent of our revenue ARR is US dollar-based in terms of reporting. So we estimated around 100 to 200 basis points based on calculations that we have done. We took into account the growth of 30% in headcount in 2025, and we didn't take into account, for example, your prior questions, any revenue from AI. It's still early days to take it into account. And mostly, you know, when we think about products, CRM is becoming more significant in terms of the contribution to the ARR. We already took it into account. Service is still just out of beta, not a lot of revenue, but it's growing really fast. And you know, we pretty much also took into account certain contributions. But overall, we see the trend that I mentioned as part of our 2025 guidance assumption.

Pinjalim Bora:
Anything on the pricing benefit, Eliran? On the pricing?

Eliran Glazer:
So what we have said last year is that we estimate between 2024 to 2026, $80 million contribution. The way we looked at it was around $30 million in fiscal year 2024, around $40 million in fiscal year 2025 that is already baked into the guidance, and also there is going to be about $10 million in 2026. Because pricing will be rolled out by July 2025. This is where we're going to end the kind of pricing rollout that we have done started last year.

Pinjalim Bora:
Thank you very much.

Operator:
And our next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.

Alex Zukin:
Yeah. Hey, guys. Congratulations on another great quarter. I guess maybe back to the Pinjalim question. If you look at what happened in the quarter for you guys with respect to Europe and the U.S., kind of what actually transpired in the month of December? Pipeline, and specifically on the enterprise, did you see it being more seasonally weighted? Did you see any impacts from the changing competitive landscape? Kind of walk us through a little bit of the shape of the demand curve in the quarter and what it's telling you about going as you really head into next year.

Eran Zinman:
Yeah. Hi, Alex. This is Eran. So yeah, like Eliran mentioned, you know, the US demand has been pretty much healthy and stable throughout November and January, December. Outside the US, like we stated, we saw a little bit of choppiness in November, but right now, you know, judging what we've seen, including Europe as well, we see signs of stabilization. So that's great to see. It gives us a lot of confidence going forward. Like I mentioned, there's some FX impact, but apart from that, that's kind of the environment that we're seeing going forward. Overall, I would say that retention continues to be at record levels, so very strong work retention and NDR as well. Enterprise has been our fastest-growing segment, and it continues to be like that. And we see the growth accelerated in the enterprise segment as well. So judging, you know, all those parameters together, it feels healthy, and it feels like we're on track to fulfill our plan for 2025.

Eliran Glazer:
Maybe I would just add, Alex, this is Eliran. Maybe just adding to Eran something that we have said last year as we see a transition in the business from PLG to SLG motion, we're also starting to see the results of each quarter coming in the back end of the quarter. So going into December, like, we used to see a more kind of flat in the prior years. Now there is also a few it's skewed towards the end of each quarter. So we have seen good signs in December when we compared to what we've seen in November back in Europe and the Middle East last year.

Alex Zukin:
Perfect. And then with respect to the guidance, guys, I'm not gonna ask you about price. But what I'm gonna ask you about is just given how much stronger the guidance looks, I think, to what some people were expecting, maybe just walk us through how are you thinking about the conservatism and the prudence given, you know, changing go-to-market dynamics from a talent perspective this year as well as just how many products you have from service to AI blocks to CRM to dev. How are you thinking about or layering more importantly in those assumptions into this guide relative to previous years? Thank you, guys.

Eliran Glazer:
Yeah. So sure, Alex. So I will repeat what I said to Pinjalim. So first of all, maybe one thing worth mentioning is that this year, I think, is more unpredictable when you compare it to prior years. The geopolitical situation across the world is, you know, to a certain extent, there are some things that you can't really predict. But this is also something that we took into account as part of our guidance. To your question on products, we have four products, you know, on the platform. We've now service being out of beta. Monday dev, Monday CRM, and Monday work management. So this is something that obviously we took into account. NDR continues to be stable at 110% and 112%, sorry. The new products will contribute a certain amount of revenue. It's growing, but other than CRM, that is now becoming more significant, we will see the results of the other products next year. So when we took all these into account, bear in mind that we also increased headcount last year by 35%. Now we see the full impact of this, you know, hiring last year. So we try to have a prudent I don't know what to call it. Conservative or not. This is a responsible guidance based on what we know today.

Operator:
And our next question comes from the line of Arjun Bhatia with William Blair. Your line is open.

Arjun Bhatia:
Perfect. Thank you, guys. And I'll add my congrats. Very nice end to the year here. One thing, Roy, that stuck out in your shareholder letter in regards to service, I think you called out that it's the highest ACV across your product line that you're seeing. I understand. I know. I think it's still a small customer count given how early it is. Can you walk through what the drivers there are? Like, are you selling this product to larger customers? Are there more add-ons? What makes service higher ACV, and should we expect that to continue as customer count grows for that product?

Eran Zinman:
Yeah. Hi, Arjun. It's Eran. So yeah, I think it's a combination of a few things. One is we see, you know, every product, I would say, has a different go-to-market. But one thing that really stood out with Monday Service is that it feels like there's a big overlap with our existing customer base and potential customer base for service. So relatively to other products, we see more momentum with cross-sell to begin with. It's still low numbers, but just percentage-wise, it feels like there's a big overlap between the audiences who we already have as a customer and people that are interested in Monday Service. And that led to more mature customers buying into Monday Service. Also, it's more of a top-down decision process. So we have, you know, management kind of involved in the process, which ultimately, if you combine those two things, leads to higher ACV deals. More top-down deals, and it just feels like it has a lot of potential to grow into a more kind of mature ACV mid-market enterprise going forward.

Arjun Bhatia:
Alright. That's very helpful. Thank you. And then maybe to follow-up just when I'm looking at, I think, some of the annual customer count disclosures you've given and if I look at Q4, I mean, net customer adds for CRM and dev, it's the only thing that looks like, you know, there's a little bit of a slowdown. Can you just help us understand what's going on there? Is that mostly your move upmarket and greater focus on cross-sell, or is there something else on the net new customer front that we should be reading into?

Eliran Glazer:
So, Arjun, just want to make sure that I understood the question. It relates to the total number of customers or you speak about CRM and dev? Just want to make sure that I follow the question.

Arjun Bhatia:
Yeah. Thanks, Eliran. It's a little bit of both. Maybe, you know, I think the total customer number also slowed compared to 2023, and then in Q4, CRM and dev. I'm trying to maybe encompass all of it in one question.

Eliran Glazer:
Sure. So in terms of the total number of customers, you know, we are now at 245,000 customers, which is more than, I think, most of our peers. And as we said in the past few times, we are going to focus on expanding within the existing customer base, growing upmarket, and we said that, you know, we are going to probably grow high single digits within the total number of customers. With regards to CRM and dev, this is related mainly to the seasonality of performance marketing spend. In Q4, usually, in Q4 of the year, due to the holidays that are coming at the end of the year, you know, customer acquisition channel spend is usually lower than what we are doing before that. And it's similar to prior years. We allocate more budget to performance marketing spend at the beginning of the year because you want to get the full impact of the performance rather than the second half of the year. So this is, I would say, the main reason for the numbers that you're seeing.

Arjun Bhatia:
Okay. Got it. Very clear. Thank you.

Operator:
Next question from Steve Enders with Citi. Your line is open.

Steve Enders:
Okay. Great. Thanks for taking the questions here. I guess maybe just to start, I want to ask about some of the, I guess, enterprise sales changes that are going on. You know, I know that CRO left last quarter and it sounds like maybe there's some other changes, but how are you kind of thinking about, you know, how that search is going, how you're thinking about kind of future changes in the go-to-market structure or strategy within that, just yeah, any more color details around that would be helpful.

Eran Zinman:
Yeah. Hi, Steven. This is Eran. So yeah, definitely, we're looking for a new CRO. We've been pretty invested in the process. Hopefully, we're kind of looking to finalize this process by the end of Q2. We're looking for a person with a proven track record and deep understanding of the complexities of scaling our market. I can share that we see great candidates and hopefully we'll get somebody across the finish line in the next few months. I would say that given all that, in the last few months, we've seen great results from the CRO organization. You can see that with the enterprise adds and overall momentum. Feels good. So definitely looking for a replacement. But so far, the management within the organization is doing phenomenal work to drive forward.

Steve Enders:
Okay. Great. That's great to hear. I guess maybe following up on that, you know, it sounds like there's maybe even some catch-up spend in that kind of organization, and you know, further kind of investment coming from a headcount perspective this year. Just I guess, what is it that you're seeing out there maybe that's leading to the confidence to kind of invest behind that and just kind of what are you seeing in the pipeline that leads to the confidence to fully back that motion?

Eran Zinman:
Yeah. So this is Eran again. So yeah, definitely, we continue to invest into the sales org. Overall, between sales and channel partners, managers, our total quota carriers have grown to almost 400, 395 by the end of Q4. It's a significant increase quarter over quarter. Overall, we feel confident scaling the organization for a few reasons. First, we see the results, and we see that we have a lot of potential for expansion within our existing customer base. We have those additional products that fuel our sales team. Our existing customers are scaling more to the enterprise. MondayDB was a big unlock for enterprise customers to scale even further. So it just feels that within our own customer base, there's a lot of potential for growth and we can add even more account managers to expand our customer base. And also performance marketing continues to be strong, and we've seen great demand, not just across work management, but across the other products as well. So if you put all those things together, it just feels that it's very healthy to increase the sales organization. We see the ROI for that, and we continue to do that in 2025.

Steve Enders:
Okay. Perfect. Great to hear. Thanks for taking the question.

Operator:
Next question comes from the line of Gili Naftalovich with Goldman Sachs. Your line is open.

Gili Naftalovich:
Hi. Good morning, everybody. It's Gili for Kash. Thanks for taking the question. I have one for Roy and Eran and maybe a follow-up if I can. First, if we can talk about AI. Right? It's so central to those top three pillars you laid as your strategic priorities in 2025. I'd love to get your perspective on how you see the AI landscape evolving over the next few years. What do you envision this meaning for Monday? Like, how do you believe the engagement with the platform may change? And how are you positioning the company to take this opportunity?

Roy Mann:
Yeah. Hi, Gili. It's Roy. So when we look at AI and where Monday plays in it, we feel we have a huge power of democratizing it, meaning really giving the power to people to build whatever they want. To harness AI into their business, into improving efficiency, and that's what we're doing, and that's the feedback we get from, you know, the beta we have with blocks and what we've seen customers do. And going forward, this is what we're planning to go for next, you know, in the vision. Actually, give people technology they can use and they can implement, like, right off the bat and, you know, that it's easy and fun to use.

Gili Naftalovich:
Yeah. Very clear. And so the second question I had was a little bit more on the record number of net new CRM and dev accounts that you mentioned you were able to add this quarter. Can you talk about what drove that momentum? Is this a leading indicator or byproduct of the headcount growth that you guys saw this year? Or is it a result of maybe a multitude of different factors?

Eran Zinman:
Yeah. I think, you know, overall, we're very happy with the business around with the adds of customers both in CRM and dev. We say that compared to Q3, Q4 was a little bit slower, and we mentioned that because of the fourth quarter seasonality. But going into 2025, I would definitely see the momentum continues with both of those products. I would say that in both, we invested more into going upmarket in each one of those products that had more features and functionality, which will also contribute not just to the total number of customers, but to higher ACV in both. That's kind of what we focused on right now going forward.

Operator:
Next question comes from the line of Brent Thill with Jefferies. Your line is open.

Brent Thill:
Thanks. And just back on the hiring front, you think about quota-carrying sales rep hiring versus the stated goal of 30% total growth. Are you growing your reps at or below or above that line? And then when you mentioned 395 quota reps, can you just update us on what that growth was for 2024 over 2023, and just give us a sense of what you're seeing from a hiring perspective?

Eran Zinman:
Yeah. Hi, Brent. This is Eran. So for the first part of your question, the year-over-year growth in terms of total quota carriers, it's about 26%, so a little bit below the overall 30% that you mentioned. We plan to ramp up hiring for sales into the first half of 2025. So this is kind of the plan going forward for 2025. Just a year ago in Q4 of 2023, we had about 330 total quota carriers. So now almost 400. That's significant growth in the last year.

Brent Thill:
Okay. Great. And now with service added in, when you think about the packaging, the go-to-market kind of as you move the enterprise, we've seen larger companies do these ELAs or bundles. I mean, how are you thinking about how your packaging is evolving to make it easier to consume the breadth of all these new solutions you're coming to market with?

Eran Zinman:
Yeah. So this is Eran. So look, I think, going forward, definitely, we see a future where we sell a bundle of products. Definitely, the ones that we see high percentages of cross-sell, I think I mentioned this earlier, but I think what's unique with the Monday Service release is that we see a high percentage of cross-sell. So that's definitely an indication from work management. So that's definitely an indication for us that potentially, you know, work management and Monday Service can be packaged together because for a lot of people, a ticket or a request is basically the beginning of a project or a workflow. So those two products really work well together. So going forward, we might sell those products, like, in a bundle to begin with, but currently, it's mostly focused on cross-sell between existing customers.

Brent Thill:
Thanks.

Operator:
Next question comes from the line of Brent Bracelin with Piper Sandler. Your line is open.

Brent Bracelin:
Thank you. Good afternoon. Good morning. Wanted to double-click in North America. It looks like growth in North America accelerated 200 basis points sequentially here, more than offsetting a deceleration sign internationally. What drove the strength in North America? Are you seeing SMB optimism start to drive activity? Is it more influenced by large enterprise expansions? Just walk through the strength that you saw in North America this quarter here and what drove that acceleration? Thanks.

Eran Zinman:
Yeah. Hi, Brent. This is Eran. So I think it's mostly been enterprise customers that are driving that. I mean, we mentioned that we had some choppiness in November in EMEA, but it seemed to be stabilized. But I think overall, if we look at longer-term trends, definitely, North America, our enterprise segment has been the strongest in terms of growth. And also, we're reaching, you know, bigger and bigger customers. So that's definitely a very significant driver in that region.

Eliran Glazer:
Yeah. Brent, this is Eliran. Also to add to Eran, I also think this is we are gaining market share. One of the things that we have seen last year is that we are basically we have a strong machine that works really well. You know, there have been some changes in our competitive landscape, which allowed us actually to take market share, to gain market share, of our competitors also, you know, focus on enterprise, so it leaves the down-market step to us in terms of SMBs and mid-market. So overall, a few trends that are actually pushing us into gaining more market share and increasing our footprint in North America.

Brent Bracelin:
Great to see that. And then just as a follow-up here, I know historically sales dev, these were largely new products that were landing new customers. I think you mentioned service, I know it was just kind of in beta here early release, but it was something like 60% cross-sell of the service customers, which is very different than what you saw with dev and sales. So can you just double-click into maybe the cross-sell? Why is service different and are you starting to see broader cross-sell opportunity across all platforms? Thanks.

Eran Zinman:
Yeah. So this is Eran. So overall, we see more cross-sell between all products. But like I mentioned, there's a lot of synergy between Monday Service and Monday Work Management, mainly because, you know, Monday Service is usually the beginning of a process or a workflow. So a lot of people kind of use Monday Service to manage the request and the admin around the request, and then kind of move on to actually executing the workflow. I think that's a big benefit also in terms of the kind of market position for customers, but also shows the strength of having multiple Monday products. It just feels like the overlap between the buyer for work management and the buyer for Monday Service is very large compared to other products, and the synergy between the product is very high as well. So that looks kind of drove the very high cross-sell, the set of chips that we see.

Brent Bracelin:
Okay. So just to clarify, you're not seeing service and sales bundled and cross-sell together. You're seeing service and work management more often.

Eran Zinman:
Yeah. I mean, we also see Monday dev and Monday CRM as well, but just the percentages with services are way higher.

Brent Bracelin:
Got it. Helpful. Thank you.

Operator:
Next question from Michael Berg with Wells Fargo. Your line is open.

Michael Berg:
Hi. Congrats on the quarter. Thanks for taking my question. Want to double-click on service one more time. Maybe you could help us understand or provide a little bit more color on what it looks like when you land with service initially. Are you landing alongside existing other service solutions? Are you displacing something? Maybe you can help us understand what the customers have in place when you are landing, whether they are monday.com customers or not.

Eran Zinman:
Yeah. Hi. This is Eran. So first of all, it's important to mention, it's not just IT service. What we've seen from the product launch is that, obviously, we have IT service, but we have HR requests, operations, financial requests, marketing requests, customer support. So it's a variety of different departments within the organization. In terms of competition, sometimes we land with another vendor and sometimes we are the only vendor. Sometimes we compete with other players in the market and win the deal. So I would say it's a combination of all the above. Mainly, I think what we again, still early days, but from what we talk with customers, they love the flexibility of the platform. I think all the big players in this industry have a degree of flexibility, and this is something that we offer from the very beginning. So the fact that it's built on the Monday platform is a huge benefit. And also the fact that in a way, Monday for them is a centralized way to work. And because Monday Service is so deeply integrated with Monday CRM and work management, it also gives us a huge benefit over other players in the market. So that's kind of the dynamic we currently see, but as I've mentioned, it's still early days. So I think as time goes by, we'll have more clarity around it.

Michael Berg:
Cool. And then one quick follow-up to you, Eliran, on NRR, it inflected in the quarter, in pretty much every metric. And you talked about stabilization on NRR moving forward. Can we think about the impact of price there and how that's baked into your comment for stabilization of the metric for 2025?

Eliran Glazer:
Sure. Mike, because in terms of just by way of reminding everyone, we are reporting a weighted average of the last four quarters. So we said that growth retention is improving significantly. We have seen good trends last year of increasing numbers. So now we're starting to see the results of this. And we said last year, we said we're going to be slightly above 110. And 111, we will see the pickup as we start this year, and this is what happened. We estimated the pricing adjustment will positively contribute around 100 basis points to the reported NDR in fiscal year 2025.

Michael Berg:
Oh, well, thank you.

Operator:
Next question comes from the line of Michael Funk with Bank of America. Your line is open.

Michael Funk:
Thank you for the questions this morning. Wanted to ask about the success with larger customers that you've seen recently. If you can just frame maybe the greater complexity of those deals because expansion prospects. May I also come back to a comment you made earlier about market share gains and maybe some consolidation you might be seeing among the larger customers?

Eliran Glazer:
Sure. Michael, this is Eliran. So maybe again to take you a step back, we have started a process of improving the platform two years ago with MondayDB. So we had, you know, our plan to make sure that the platform is going to be scalable. We're going to address speed, performance, and scale. So we are now it's in MondayDB 2.0. And we keep improving, you know, the infrastructure to allow bigger larger customers to work on the platform. In addition to that, we hired people throughout the hiring process of the prior year going into this year that are more familiar with selling to the enterprise customers in terms of speed market and enterprise. And this is the process that we continue to do. We invested in the depth of the product, not only on the breadth of the product, although we have Monday Service. So all of that together, you know, by well, you know, the acknowledgment of the market that Monday is indeed a platform that can be used within larger and larger customers. Also having in mind the fact that we took market share from competitors also, you know, we said that enterprise is our fastest-growing business segment. You know, the sales teams are performing well, particularly in the US. And, you know, you can also see the increase in 50k and 100k customers NDR that is related to large contract expansion with the enterprise customers. All of the above, all of the things that we have done over the past, I see, I would say, two years, the investment in people, in technology, in product is something that is driving the business forward into the enterprise.

Michael Funk:
Great. Thank you for the color. One more quickly if I could. Against the backdrop of the strong net adds for CRM and dev and your comments from the macro and adding more quota-carrying reps, is there any reason to believe that net additions slow in 2025 for CRM and dev?

Eran Zinman:
Yeah. This is Eran. So look, it might go a little bit. I mean, it's kind of hard to predict. But overall, we continue with strong momentum around performance marketing. I would say that overall, not just for CRM and dev, but for the company itself is to go upmarket and have higher customer ACVs. So I would say that our product focus is not necessarily to add a lot of, you know, very small businesses. But rather to scale within our existing customers in CRM and dev, and bring larger customers. So I would say definitely in terms of, you know, revenue and ARR portion, we continue to accelerate in the product. It's just gonna be a different mix between, you know, the number of customers and ACV going forward.

Roy Mann:
Yeah. Hi. It's Roy. Like, I think to what Eran said, like, the decision to make the price increase is also a decision towards that end. Okay? We preferred larger customers, you know, more interest rather than increase the number of total customers.

Michael Funk:
Great. Thank you for the questions.

Operator:
I'd like to remind everyone to please limit yourself to one question. Thank you. Our next question comes from the line of Tom Blakey with Cantor. Your line is open.

Tom Blakey:
Hi. Thanks for taking my question. I might have two here. Just going back to AI, seeing this, you know, kind of parabolic increase in AI interactions, a couple of clarifications in the longer-term question. Is it safe to say that there was, you know, close to zero, if not zero AI revenue in calendar 2024? I think you mentioned, you don't include any AI revenue in your calendar 2025 guide. Just wondering what you're seeing in terms of that big uptick in interactions and what if you look out a little bit, where you think AI revenue could be at this company in the longer term, but I have a follow-up.

Roy Mann:
Hi. It's Roy. So it's really too early to say because what we saw is increased usage and then you introduced pricing, and then you want to see customer reactions and how they grow. So we didn't predict anything, and we couldn't, you know, bake it in. Going forward, I think when we look at the market, we see, like, so many different pricing strategies for AI. Some is for winning markets. It's for revenue. You know? Like, we feel confident in the blocks and usage of actions as an addition value that customers are willing to pay for, but we'll have to wait and see how much this is true and what we can, you know, expect looking forward.

Operator:
And our first question comes from the line of Derrick Wood with TD Cowen. Your line is open.

Derrick Wood:
Great. Thanks. Congrats on a strong quarter. And I wanted to talk about the comeback to the larger deal theme and you guys highlighted in the shareholder letter you captured an 80,000 seat customer in 2024, which I know you talked about previously. Could you talk about how you feel about the opportunity to see more multi-thousand seat engagements in 2025 versus 2024? Just wondering if we can see a notable uptick in that kind of deal activity. Or if that will kind of be gradual over looking out over the next few years.

Eliran Glazer:
Yeah. Sure, Derrick. This is Eliran. So the way we do it is either, you know, we land bigger to begin with and then, you know, like a top-down transaction that we are now seeing more and more. So this is one way to do it, and we are, you know, the hiring in the sales organization, the changes that we are now doing in the sales organization, the profile, are also contributing to that. And on the other end, we have customers that grew with us for a few years. And, you know, once they unlock the value of the platform and we have our we are adding additional products, they are doing consolidation on Monday. We are, you know, replacing other vendors in terms of switching. So the trend, I think, this is something that we started to see, I would say, about a year and a half ago, and now we're seeing more and more. It comes with the growth of the platform, the additional product, and the profile of the people that we have. Together with acknowledgment of Monday as a solution that can address enterprise-level solutions.

Operator:
Next question comes from the line of Ittai Kidron with Oppenheimer. Your line is open.

Ittai Kidron:
Thanks, guys. I guess a couple of small ones for me. I'm following with Derrick's question on the 80,000 seats. Great to see the expansion there. Maybe you could give us a little bit more color on the breadth of 10k plus seat customers, how many of those are in the wild? And then the second question is regarding AI. Do you see any risk of cannibalization with the adoption of your AI solutions? Thank you.

Eran Zinman:
Yeah. Hi, Ittai. It's Eran. So look, I think, like Eliran mentioned, overall, we see definitely more potential for larger deals. We had those expansions also this quarter and continue to have potential within our existing customer base for more deals like that. So it's kind of hard to predict because it's happening over a few quarters, but definitely something that might happen as well in 2025. Regarding AI, so we made a decision, like Roy mentioned, to base it based on consumption and not based on seats because, you know, it's kind of hard to predict the long-term trends, but you know, if AI can replace some manual work and automate some processes, we want people to be able to scale on that regardless of the fact that they're adding more people or not. So that made a lot of sense for us to base the pricing based on consumption. I don't think it will cannibalize, you know, the seat count that we have, but just offer a different path of capability for our customers based on usage and not necessarily people.

Operator:
Next question from DJ Hynes with Canaccord. Your line is open.

DJ Hynes:
Hey, guys. So on one of the slides in your deck, the slide is where do we want to go from here. It lists expanding core work product lines as a key initiative. So I guess that begs the big picture question. Like, where does Monday go next? Thoughts?

Roy Mann:
Yeah. So general questions, Roy. So one big thing is really deepening each one of our products into a suite. Like, we took a conscious decision to deepen everything. Like, what Eliran mentioned, the platform itself, the scalability, robustness, and that you can rely on it more and more. Each one of our products, like, we released in CRM, the marketing solution. And, you know, we have, like, massive markets to go after. And so we want to deepen the offering, and then AI is also a huge thing. Blocks is one of them. But we're also embedding AI within each one of the products in a way that really accelerates the vision we have. Like, in project management, it will help people turn all their portfolio into being way more predictable. For example, CRMs sell more. You know? And so we have a very clear roadmap of, like, giving the same value just more fast, better, and deeper.

Operator:
Next question from Jackson Ader with KeyBanc Capital Markets. Your line is open.

Jackson Ader:
Great. Thanks for taking our questions. So my questions are around the sales-led growth function. Just curious how you guys are managing the puts and takes on sales cycles as you begin to stack up, you know, multiproduct deals that might elongate some sales cycles and just make things generally more complex. So I'm curious about just the basic blocking and tackling you're doing around those sales cycles. And then the other thing is, what would be the best indicator of the efficacy of the sales-led growth motion that we should be kind of tuning into? You know, is there a way to split out maybe the enterprise customer lands versus existing customers or kind of graduates into that fifty or a hundred thousand? But, yeah, just some of the KPIs that we should all be looking out for to see if this sales-led growth motion is really working out. Thank you.

Eran Zinman:
Yeah. Hi, Jackson. It's Eran. So regarding the first part of the question about the product, so definitely, we put a lot of thought into this. So I would say it's a combination of a few things. One, we have customers landing multiple marketing campaigns. Some land for CRM products, some for work management, that service, etcetera. So right now, the way it works, we have specialized teams for each one of those products that are handling new customers, depending on the products that they chose. And we basically scale those things based on the demand that we see and just to scale the product. And then in addition to that, we have account managers that are already engaged with customers and when they identify an opportunity for expansion, whether it's through our Big Brain system, that identifies new people joining organizations from one of the departments or whether it's my relationship and conversation. We have special functions called overlay, which basically helps them cross-sell with people that specialize in those areas, whether it's CRM or service and so on. And they help them close kind of initial deals with the decision-makers in the organization. So we have different functions depending on the phase of the sales process that help go through this and we're really kind of shaping that in terms of scale and just create an economy for them to kind of build their own sales strategies. And to the second part of the question about, I think you mentioned about scaling the sales org. And starting to larger enterprises. So also there, we have AEs, account executives that close new deals for each segment. So we have some SMBs, some for mid-market and enterprise, it's a totally different sales process for each one. And we have the same segmentation for account managers. So we really kind of segmented the business based on products and then based on company size. And for each one, we have different kind of dynamics in terms of the sales process and also the time it takes to close the deal. So this is kind of how we think about this. Now, and obviously, it will evolve over time.

Operator:
Next question from Scott Berg with Needham. Your line is open.

Scott Berg:
Hi, everyone. Really nice quarter here. I guess my question is on the digital workforce, you know, strategy part of your AI initiatives here. For this year, we've seen many other vendors, you know, release different agents. And when they have, it's kind of created a halo effect, you know, for customers having to maybe buy more, you know, components of the solution to really make those agents work. If you think about agents or digital workforce on the Monday platform here this year, I guess what parts of the platform does a customer, you know, really need to kind of create this? Is it just the core work management system or is there other pieces in the functionality add-ons that they need to also purchase to enable this technology?

Roy Mann:
Hi, Scott. So, like, we see agents as another layer on top of the Work OS, meaning it's, like, across every product. But when you work with an agent, you'd love it to know. First of all, you'd love to control what it knows, but you eventually want it to be a cross-product. Okay? And I think that's a lot of the power of Monday. Let's say you want the Monday expert agent to create a dashboard across a lot of different products. So we could be able to do that. And so we don't have a plan for monetization for that part yet. I think we opened it up so we will have in the future once we see the different agents. Okay? And so I'm excited about this because I think it's like a massive opportunity for us to build a marketplace, a lot of agents that can do different things, and you can communicate with them and achieve way more. And, obviously, because it's on top of the Monday platform, each one of our agents will be able to do a lot of things because the platform and, you know, really powerful things you'd want them to do and not just, like, talk with them.

Operator:
Next question from Taylor McGinnis with UBS. Your line is open.

Taylor McGinnis:
Yeah. Hi. Congrats on the quarter, and thanks so much for taking my question. Just focusing on the outlook for stable NRR, so this seems to be pointing to an in-period NRR number that is higher than the 112% trailing twelve-month metrics. So first, is that true? And then second, I guess, why couldn't we see NRR trend up? Is that just conservatism? Are you not yet maybe seeing seat expansions recover in this macro? Seems that that would just be more biased up given the cross-sell opportunity and focus upmarket. So Eliran, can you just help us, you know, understand some of the puts and takes there? Thanks.

Eliran Glazer:
Yeah. Sure, Taylor. This is Eliran. So, you know, first of all, we've been very encouraged about NRR improving faster than we initially anticipated. You know, back in 2024, we were very transparent about it. On the other hand, you know, given recent demand volatility and macroeconomic uncertainty, you know, we're adopting a bit more cautious outlook on NRR because I think we're in some places, we are not yet the worst in terms of global headwinds, you know, economy headwinds are not yet out of the woods. So we're trying to be a bit more prudent in this firm.

Operator:
Our next question comes from the line of Allan Perovski with Scotiabank. Your line is open.

Allan Perovski:
Hey. Thanks, guys. Can you talk about how based on your AI product roadmap, how are you thinking about a few years from now what an average customer could be spending for AI credits relative to their seat license cost?

Roy Mann:
Oh, that's like predicting the future kind of question. So really, we just released it. We'd love to see more data from customers, so we'll be able to know to answer those questions. So I can't really say. Sorry.

Operator:
And that ends the question and answer session. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.