Monday.com (MNDY) Q2 2023 Earnings Call Transcript

Monday.com (MNDY 2.81%)
Q2 2023 Earnings Call
Aug 14, 2023, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

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 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.

Byron Stephen -- Director, Investor Relations

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 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 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.

Roy Mann -- Co-Chief Executive Officer

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 and deliver exceptional results. Revenue grew 42% as demand for our customers remained 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 large 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 capabilities. These include automated task 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 multi-product ecosystem. We see an extraordinary opportunity to enhance cross-selling efforts, strengthen interdepartmental organizational connection, 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.

Eran Zinman -- Co-Chief Executive Officer

Thank you, Roy. As Roy mentioned, we remain focused on our multi-product strategy and ensuring that our products can successfully enable cross-functional collaboration for our customers. monday sales 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 sales 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 sales CRM. In addition, we've revamped and upgraded our mobile item page, making it easier than ever before to access and update information on the go. We also recently announced that monday dev successfully transition out of beta. Initial demand for the product has been strong, and monday dev has already earned a place as one of the top-rater bug-tracking softwares on Q2.

As we gradually roll out monday sales CRM and manage 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 have seen an impressive 1,656 accounts initially begin with our work management product and later expand their portfolio with an additional product. This significant extension underscores the value of our offering and the trust our customers have placed in us. Separately, we're excited to announce that we are elevating the workflow experience for our customers with the introduction of monday workflows add-on.

monday workflows offers a fully customizable and visually intuitive interface, empowering users to build workflows with ease. By utilizing drag-and-drop blocks, monday workflows simplifies the entire workflow creation process, making it accessible to users of all levels of technical expertise. The new monday workflow is 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.

Roy Mann -- Co-Chief Executive Officer

Thank you, Eran. As we continue to grow, we are focused on ensuring we have the right team in the right place to lead monday.com into the future. And we took steps in the quarter to strengthen our management team with the promotion of two senior executive. Daniel Lereya, 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 an outstanding senior leaders for many years here at monday.com, and we are confident that they will both excel in these new roles. Finally, we are excited to announce that this year's New York City Elevate conference on December 6th 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 generate sustainable long-term value for our shareholders. With that, I'll turn it over to Eliran to cover our financial and guidance.

Eliran Glazer -- Chief Financial Officer

Thank you to everyone for joining our call. Today, I'll review our second quarter fiscal 2022 results in detail and provide updated guidance. Q2 '23 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 NDR in the second half of fiscal year '23, and our guidance now assume full year NDR slightly below 110%. As a reminder, our NDR is trailing four-quarter weighted average calculation.

For the remainder of the 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 90%. In the medium to long term, we continue to expect gross margin to be in the high-80s range.

Research and development expense was 27.9 million or 16% of revenue compared to 19% in Q2 2022. For fiscal year '23, we anticipate that R&D expenses as a percentage of revenue to be in the high teens as we build our product suite and scale our Work OS platform both horizontally and vertically. Sales and marketing expense was 98.8 million or 56% of revenue compared to 70% in Q2 2022. G&A expense was 14.7 million or 8% of revenue compared to 12% in Q2 '22.

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 '23. We expect to continue hiring throughout the course of fiscal year '23 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 '23. Free cash flow for Q2 was 45.9 million, and free cash flow margin as 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 '23. 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 '23, 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% and 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.

Questions & Answers:

Operator

[Operator instructions] Your first question comes from Kash Rangan with Goldman Sachs. Your line is open.

Kash Rangan -- Goldman Sachs -- Analyst

Great. Congratulations on a 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 Dev 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 net expansion rate to stabilize at some point? And when do you think we see the bottom in that? Because obviously, if you've got the install base potential for these products, we should sort of see a turn in that metric. So, just wondering if you have any thoughts on that. Thank you so much once again.

Eran Zinman -- Co-Chief Executive Officer

Yeah. Thanks, Kash. This is Eran. So, just to repeat the first part of your question, you were asking about monday DB and monday dev.

Kash Rangan -- Goldman Sachs -- Analyst

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

Eran Zinman -- Co-Chief Executive Officer

Yeah, so monday DB, monday database, is basically -- it's not a product, but a new state of capabilities that we release 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 a deployment of version 1.0, which is ahead of schedule and a major milestone for us as a company. This new infrastructure just allows customers to dramatically scale on top of our platform in terms of size of boards, size of dashboards, automations, integrations.

And 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 and more usage and more attention among our larger customers. monday dev is our product that's competing in the dev industry, basically allowing developers and product managers and designers to work effectively on agile sprints and manage on the operations. And this product is getting very nicely. We just launched out of beta as we mentioned, and we see some good numbers and momentum.

And we see this as a very strategic industry for us as a company.

Roy Mann -- Co-Chief Executive Officer

Yeah. Hi, Kash. 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 a platform.

The products are built on top of a platform, which allows our customers to shape the solution to whatever they see fit and how their organization works. And we see this as a huge advantage also on deals and with customers. When we talk with them, it's a major thing that it's built on top of the Work OS.

Eliran Glazer -- Chief Financial Officer

And now, Kash, I will address your question on NDR --

Kash Rangan -- Goldman Sachs -- Analyst

Yes, thank you.

Eliran Glazer -- Chief Financial Officer

I wanted to address NDR, but please follow up on maybe you have --

Kash Rangan -- Goldman Sachs -- Analyst

No, I just wanted to get to the thoughts on what is kind of missing in the marketplace with the dev community that you think you could address the particular problem. That was what I was curious about.

Roy Mann -- Co-Chief Executive Officer

And so I think there is like one major player within this market, and what we see is that it's very geared toward developers. And when we look at the R&D teams, it's comprised also of product people and designers, and then you have the rest of the company that you want to connect to. And with monday, we feel -- our customers feel they can customize it better to 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.

Eliran Glazer -- Chief Financial Officer

OK. Thank you, Roy. This is Eliran. Kash, I will address your questions with regards to NDR.

So, as we said, we continue to expect moderate pressure on NDR throughout the remainder of the year. And by the way, we took it into account in our guidance, and we assume full NDR to be slightly below 110%. To your question, when we are expected to stabilize, so 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, then there is a lagging effect.

Maybe just also worth mentioning that the gross retention on the same level remains stable. And even, you know, though we saw some NDR decline, it was offset by strong customer acquisition.

Operator

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

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Great. Hey, thank you so much, and congrats on the great quarter. Roy or Eran, 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, and one of your partners said it could accelerate third-party development. You are exposing the AI layer, as well as the workflow engine, seems like, to the partners. Do you think marketplace starts emerging as a material growth driver in 2024?

Roy Mann -- Co-Chief Executive Officer

Hey, Pinjalim. It's Roy. It's hard to say how much material it would be because we have our core product, the CRM, the dev, the work management, which is the main growth driver. We do believe that the marketplace will help us close larger deals.

There's a lot of, like you mentioned, partners are working on it and making each of those products more complete, more suited for long-term solutions. And so, we put a lot of emphasis on the marketplace and a lot of investment in the ecosystem. And I think it's a very -- it's a longer-term play rather than just like making the numbers for next year.

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Understood, just one follow-up on the macro environment. Seems like that 110%, Eliran, 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 stabilized. So, I'm a little bit confused on maybe what are you seeing on 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'll help. Thank you.

Eliran Glazer -- Chief Financial Officer

So, demand environment hasn't really changed to what we said, Pinjalim, in the prior quarters. We still see some pressure with the new customers' expansion -- multi-expansion, with regards to -- you know, decision-makers are brought to the table and longer sales cycle. So, there wasn't really a big change. And the pressure on net dollar retention, we also called it out in prior quarters and now said that it's going to be slightly below 110 percent.

But we did see some stabilization with the net dollar retention going into July as kind of it's getting flat. So, by the end of the year, because of the lagging effect of the four trailing quarters, it's going to continue, but then we believe that it's going to pretty much flatten by then. And then, hopefully, next year, we're going to see. a change in the trend.

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Understood. Any comments on the top of the funnel demand at this point, July and August?

Eliran Glazer -- Chief Financial Officer

Top-of-funnel activity remains healthy. We still see a very healthy, you know, stream of new customers joining monday. Also, having in mind the fact that we now have CRM and monday dev is out of beta, it definitely contributes to the fact that we are bringing a healthy stream of customers.

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Thank you very much.

Operator

Next question comes from Jackson Ader with MoffettNathanson. Your line is open.

Jackson Ader -- MoffettNathanson -- Analyst

Great. Thanks for taking our questions, guys. First one on the commentary from monday DB. Are there any 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?

Eran Zinman -- Co-Chief Executive Officer

Yeah. Hi, Jackson. This is Eran. So, in terms of the impact, monday DB has already -- it's about 5x, the performance in terms of loading large boards.

And as we release additional versions, we'll see more impacts on other parts of the platform. So, definitely customers feel it. We get great feedback from customers. Customers are able to use larger and larger boards.

We don't see it yet in terms of revenue numbers on net retention because, just as a reminder, we just finished rolling it out to our customers. And we expect this to have a longer-term effect on customer expansion and usage. But in terms of customer feedback and the results that we measure in terms of loading time and performance, the results are super positive. So, we're pretty certain it will have an impact.

It's really hard to quantify exactly right now.

Jackson Ader -- MoffettNathanson -- Analyst

OK. Yup, that makes sense. And then, in terms of the net retention rate, I hate to keep coming back to it, but I'm just curious whether there's any -- in the signs of turning around that you talked to 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?

Eliran Glazer -- Chief Financial Officer

Jackson, this is Eliran. It's really broad-based. We're seeing it -- you know, when you look on a month-on-month basis, first of all, it's -- you know, the decline is becoming more and more moderate across the board. So, I wouldn't call out any specific segment, just more encouraging across all segments.

Jackson Ader -- MoffettNathanson -- Analyst

All right. OK, great. Thank you.

Operator

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

Steve Enders -- Citi -- Analyst

OK, great. Thanks for taking the questions here. 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, I guess, what's like the typical, you know, customer journey look like going from the platform to the CRM? And is it for kind of net new use cases, or is it customers kind of converting over from maybe already using some of those existing capabilities for a CRM-like use case?

Eran Zinman -- Co-Chief Executive Officer

Yeah. Hi, Steve. This is Eran. So, as we mentioned, over 1,600 accounts that were using work management has bought the CRM product and the dev product in addition to that.

And so, it's not like initially buying those two products, but accounts that were already using monday, sometimes, for a few months, sometimes, over a year, have explored our product offering and then decided to buy the CRM product. I think what's interesting, what we found is that almost in all cases, the CRM users were in addition to the one they already were using, the work management platform. So, you would see people, you know, sales people and manager from the sales team buying additional seats for the CRM product. So, I think this is kind of really encouraging to see other departments joining and having a large deployment within customers.

So, mostly, with new teams, sometimes, they were already users from the work management. But a lot of times, it was new teams that were introduced to the new CRM products. And just a reminder, we didn't put a lot of effort yet to promote it within the platform or any promotions or sell things, start approaching customers, and sell it organically, but we're very encouraged with the numbers. And this is really connected to, you know, our strategy of selling and moving of products to different departments within the organization.

Steve Enders -- Citi -- Analyst

OK, got you. That's helpful. And then, maybe for Eliran, you know, really strong free cashflow in the first half of the year. Is there anything that we should be thinking about in terms of like linearity throughout the rest of the year? And anything like onetime in nature that maybe got pulled into the first half that would change some of the typical seasonality there?

Eliran Glazer -- Chief Financial Officer

Yes, so with regards to -- Steve, with regards to free cash flow, so when we're looking at Q3, we're probably looking at high teens. And we're looking at fiscal year '23 as a whole, you know, probably low 20s. We're seeing a very healthy disciplined spending and improving efficiency that also contributes to that, a very healthy top-of-funnel activity that contributes to the collection cycle. So, all in all, we kind of increased our expectations for Q3 and the end of the year.

Steve Enders -- Citi -- Analyst

All right, perfect. Thanks for taking the questions.

Operator

Next question comes from Arjun Bhatia with William Blair. Your line is open.

Arjun Bhatia -- William Blair and Company -- Analyst

Perfect, thank you and congrats, guys, on a great quarter. I wanted to touch on some of the upmarket fraction that you're seeing. It's clear, you know, 50K 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 up market you would want to go? Like 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?

Roy Mann -- Co-Chief Executive Officer

Hey, thank you for the question. It's Roy. So I think it's a journey going up market. We've been taking it for a while now.

And every time we keep seeing -- as we roll out new features and new capabilities, we see strong demand for even deeper and newer ones. Like a good example would be monday DB. This opens up the door for a lot of new use cases, and then those use cases will want probably more stuff. So, we do not see ourselves as limiting the company to an exact size, but I think it's a journey that will take a few years to really grow and then to larger and larger companies all the time.

And we are pushing toward that direction.

Eliran Glazer -- Chief Financial Officer

Arjun, just to add to Roy, this is Eliran. We had -- at the end of last year, we had 196,000 customers. And when you think about adding more capabilities and more functionalities and more products, basically, it allows us to have better retention and increase monetization of not only new customer but existing customer base. And as part of this journey, you know, customers that may be joined as SMB on these markets can become enterprise accounts in the following years.

So, we have both the new customers, the land, and as well as expansion within existing customer base. That's our potential for growth.

Arjun Bhatia -- William Blair and Company -- Analyst

All right, perfect. That's very helpful. And then, I want to touch on the new products again because it seems you're getting a lot of good adoption on dev and CRM, both from new customers and cross-sell into the base. If I look at the 1,600 customers that you've kind of cross-sold from work management, there's quite a few that have just adopted CRM or dev net new.

And so, the question I guess is how do you think about dev and CRM becoming a top-of-funnel landing point for customers and then cross-selling the other way into the work management platform? Is that an opportunity that's still out there, or have you seen those 8,000-plus customers adopt your work management platform already?

Eran Zinman -- Co-Chief Executive Officer

Yeah, this is -- thanks, Arjun. This is Eran. So, I think you made a great point. You know, obviously, those products are obviously more new than the work management product, so we were more focused on seeing how existing customers can move from work management to CRM or dev.

But, you know, one thing that we really focused on from the very beginning was to make those products also, you know, a substantial go-to-market for us as a company. That was our initial focus. So, definitely going forward, we'll see accounts moving from CRM to work management. And going back to our strategy, I think it really helps us as a company in two ways.

One, really expands our go-to-market. So, instead of having just one, which is work management, now we have multiples of both CRM and dev and work management. But also, it allows us to have a greater ACV for customers. So, you can buy customer, but the revenue potential expansion is not limited only to that specific vertical, but to have multiple products on top of that.

So, I think that creates a big opportunity for us in terms of go-to-market. And going forward, we'll see the other way around, people moving from CRM to work management as well.

Arjun Bhatia -- William Blair and Company -- Analyst

Got it. Thank you very much. And great job on execution, guys.

Operator

Next question comes from Derrick Wood with TD Cowen. Your line is open.

Derrick Wood -- TD Cowen -- Analyst

Great. Thanks for taking my questions. 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?

Roy Mann -- Co-Chief Executive Officer

Sure. Hi, it's Roy. So, we have taken a several layer approach to AI. We started with like adding a layer to the platform -- to the entire platform that you can add any AI capabilities you want to any section of the products.

And we released a few examples for it, like formula builder and like auto-complete stuff and those kind of things. The reaction we got from the marketplace actually, from developers, was amazing because we had like 1,600 people sign up for a hackathon, and a lot of apps are being built right now. And we were hoping to launch them going forward. I think it's very early days, and we see a lot of customer interest in those areas.

And we feel it's a journey ahead that we will take. And we're really committed to AI and even adding more stuff going forward with AI as, really, it's like the place for us to give more power to people to control and how they manage their business.

Derrick Wood -- TD Cowen -- Analyst

Got it. Thanks, that's helpful. I guess just staying on a product discussion. Now that you're through 1.0 of monday DB, what's the next phase? I guess the 2.0.

Can you just give us some color as to what things we should be expecting out of 2.0 and what that timeline may look like?

Eran Zinman -- Co-Chief Executive Officer

Yeah, first of all, we have a complete timeline on our website, which we share with our customers as well. But overall, next phase, which is the monday DB 1.1, is going to be released in Q4 this year. The focus is going to be on large dashboards. Just as a reminder, a dashboard contains data from multiple boards.

So, that will go through a radical transformation in terms of performance and capability. And then, we plan another minor release of monday 1.2, which is going to focus on our API, and [Inaudible] filter and sort and aggregations. Going into next year, 2024, we're going to do a major release of monday 2.0, which will be a really game-changer in terms of accommodating larger and larger accounts. So, we're going to focus a lot on just sheer size of databases and accommodating very large enterprise accounts.

So, we have a lot of releases in the pipeline. But having monday DB 1.0 already released is I think the most significant part because, now, all customers are using the new engine, and those incremental releases are going to be much easier to get out into our customers.

Derrick Wood -- TD Cowen -- Analyst

Great, thanks. Congrats.

Operator

Next question comes from Brent Thill with Jefferies. Your line is open.

Brent Thill -- Jefferies -- Analyst

Thanks. 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 flow through.

And I had a quick follow-up.

Eliran Glazer -- Chief Financial Officer

Hey, Brent. It's Eliran. Yeah, so based on -- just a way of reminder, we beat the revenue by 7 million. And, you know, with the help of also the FX dollar versus the Israeli shekel was very strong.

It's also contributed to the fact that we are healthy on our cost side. So, the combination of the new products that we have, the momentum that we are seeing, together with the disciplined and efficient spend that we have as part of our monday playbook provide us with comfort to, you know, increase the guidance for the end of the year and to achieve these numbers.

Brent Thill -- Jefferies -- Analyst

And when you think about for 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?

Eran Zinman -- Co-Chief Executive Officer

Yeah, Brent. So, this is Eran. So, I think it goes two ways. One, as I've mentioned, we see new users using those additional products.

So, that's additional seats that we didn't have before. In addition to that, the CRM product has higher pricing per seat. And we're going to experiment with that. We're still below the market average, so there's more room to increase those prices.

So, I think both in terms of the individual pricing for each product and also the potential in having more seats for a company, those two factors has a major upside to increase the average ACV of our customers.

Brent Thill -- Jefferies -- Analyst

Thanks.

Operator

Next question comes from George Iwanyc with Oppenheimer. Your line is open.

George Iwanyc -- Oppenheimer and Company -- Analyst

Thank you for taking my question. Maybe digging into the competitive environment, are you seeing any differences in use case expansion, head-to-head competition? Any signs of tool consolidation within either across departments or across divisions?

Eran Zinman -- Co-Chief Executive Officer

Yeah. Hi, this is Eran. So, I think it's pretty much aligned with what we mentioned before. As a reminder, 70% of our deals will see -- 70% no competition, still feel greenfield.

I do want to mention that in terms of the vertical products, we are seeing new competitors in the CRM markets. We see new competitors such as Zoho CRM and HubSpot and a little bit of Salesforce. And in the dev tool, we are seeing new competitors. I think that's another part of the fact that we address new audiences and seeing those vertical tools appearing in deals.

But still, not one significant competitor or anything that has any impact on the business, still pretty much aligned with before.

George Iwanyc -- Oppenheimer and Company -- Analyst

Great. 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?

Roy Mann -- Co-Chief Executive Officer

Hey, it's Roy. So, we definitely see ourselves alongside Salesforce, and we have a lot of those deals. And even -- it's our no. 1 integration to monday salesforce, and we do a lot of this together.

So -- and definitely, this is -- the strategy going forward when we go to larger companies is to be like something that's complete Salesforce and build around it to connect the rest of the organization to the CRM rather than displace them at all. So, what we do see is like on the small and mid-market, there we see that we can -- we compete with other CRMs that have graduated from the very simple ones and the rigid ones. And when they're looking upward, they see us as one of the only solutions that they can really customize to what they need. And that's a big part in CRM, to be able to make it your own.

George Iwanyc -- Oppenheimer and Company -- Analyst

Great, thank you.

Operator

Next question comes from DJ Hynes with Canaccord Genuity. Your line is open.

DJ Hynes -- Canaccord Genuity -- Analyst

Hey, good morning, guys. Just one for me. Roy and Eran, how do you think about the opportunity to revisit product packaging to kind of incentivize multi-product land as the scope of the platform continues to expand?

Eran Zinman -- Co-Chief Executive Officer

Hi, DJ. This is Eran. I think you touched on a great point. It's actually things we're discussing right now in terms of our strategy going forward.

One of the options that we now have as we expand our product offering and, you know, also taking into account previously launched products, such as WorkForms and WorkCanvas. It's the ability to package multiple products into a product suite and then offer that not just as a, you know, package of individual products but actually as a business solution that we can sell to senior management within companies. I think that will also help drive more enterprise deals and dock in more with decision makers and allow us to do -- double down sales. So, definitely, across our strategy, going forward, we're definitely looking into that.

DJ Hynes -- Canaccord Genuity -- Analyst

Yeah. OK. Appreciate the color. Thank you, guys.

Operator

Next question comes from Andrew DeGasperi with Berenberg. Your line is open.

Andrew DeGasperi -- Berenberg Capital Markets -- Analyst

Thanks for taking my question. Maybe first on monday dev, just noticed you have, what, 700 -- 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 path? And then, I have a follow-up.

Eran Zinman -- Co-Chief Executive Officer

Yeah. Hi, Andrew. This is Eran. So, it's still early days, I would say, with the dev product, but we're very happy with the traction and what we've seen so far with the numbers.

It's hard to tell if it will play faster than CRM or a bit slower than CRM. But overall, if we compare it to benchmarks or even our own growth rate when we started monday.com, we're very happy with the results. The momentum is very strong. And also, the feedback we get from customers is very positive.

So, we're very happy with the growth, and we'll see how it plays out. And I think this specific product has a lot of potential to further expand within our organization. Roy mentioned that, as part of a previous answer, that our customers are not using that product just for the dev team. We see product teams joining, we see designers, we see analysts.

So, basically, we got people using their whole ecosystem around building products using this monday dev product. So, I think this has a lot of potential in terms of growth within the accounts they're using.

Andrew DeGasperi -- Berenberg Capital Markets -- Analyst

Thank you. And then, maybe, Eliran, on the upper performance marketing side, I mean, there was -- maybe can you elaborate a little bit in terms of what did you see in the market this quarter? Was it, you know, unique in terms of what happened? And do we expect that to change in the back half?

Eliran Glazer -- Chief Financial Officer

Sure, Andrew. So, you know, the digital marketing environment has been largely stable. We didn't see anything materially change that we should call out. It's pretty much what we saw before.

Obviously, some of the competitors have to come back into their performance marketing spend in order to start to acquire new customers, but it doesn't really yet affect the significant -- you know, the prices. There is an uptick but nothing material that we're seeing.

Andrew DeGasperi -- Berenberg Capital Markets -- Analyst

Thank you.

Operator

Next question comes from Scott Berg with Needham and Company. Your line is open.

Rob Morelli -- Needham and Company -- Analyst

Hi, this is Rob Morelli on for Scott Berg. Thanks for taking the question. I got disconnected a little bit, so apologies if some of these questions are already asked. But with the release of monday DB and future releases coming, you know, are you anticipating that these will allow you to target and offer different use cases? And then, you know, hearing a lot of discussions surrounding consolidation trends within the CWM space, have you noticed any shifts in your top of funnel or, you know, with existing customer discussions? Thanks.

Eran Zinman -- Co-Chief Executive Officer

Yeah. Hi, this is Eran. So, the first part of your question, I think we referred to it as part of the other questions. But basically, as we mentioned, we released the DB 1.0.

And more than anything, we feel this has a lot of potential to go upmarket and to serve larger and larger enterprise deals. We got great feedback from customers, and we see them scaling using this new infrastructure. And we plan to release additional minor versions and major versions in the next few months. And can you just repeat the second part of your question? Sorry.

Rob Morelli -- Needham and Company -- Analyst

Just from a consolidation, you know, trend, in regards to consolidation trends, have you guys noticed anything shifting within your top of funnel or just with existing customer discussions?

Eran Zinman -- Co-Chief Executive Officer

Yeah, so we haven't noticed any change in customer behavior. We did see some customers consolidating on monday, taking a few products into the monday platform. But nothing that's super substantial. We also don't see any customers stop using monday because of any consolidation.

As Eliran mentioned, churn has been very stable. Downgrades are very stable. So overall, we don't see any movement like this.

Rob Morelli -- Needham and Company -- Analyst

Got it. Thanks for the color.

Operator

The next question comes from Jason Celino with KeyBanc. Your line is open.

Jason Celino -- KeyBanc Capital Markets -- Analyst

Great. Thanks for taking my question. Eran, I think you mentioned in your prepared remarks doing faster cross-sell. I didn't quite hear it 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 then, if not, when might it make sense to make a more forward approach here?

Eran Zinman -- Co-Chief Executive Officer

Yeah. Hi, Jason. This is Eran. So, we see both customers expanding what we call no touch, meaning, you know, discover those new products by themselves and then buying into those new products and inviting new team members.

And we also had our sales team starting to approach existing customers and offering them the server and product. So, we see both. Definitely with our sales team, we are managing to land large deals with more potential to expansion. Going forward, we will keep optimizing that funnel and expand our ability to cross-sell into other accounts.

Jason Celino -- KeyBanc Capital Markets -- Analyst

Great. Thanks. And then, Eliran, just a quick clarification question. I know we've touched on your comments on July and seeing some signs of stabilization, but curious on maybe some of the subtle details if you're able to help us out.

You know, is this a reflection of slowing down sales or slowing seat optimizations or slower down tiering? Just curious on some of those subtleties.

Eliran Glazer -- Chief Financial Officer

Hi, Jason. So, with regards to the recovery, I believe that during the last year and a half with macroeconomy that was challenging, you know, there was a decline that now we see the effect. If you think about the way we look at our net dollar retention, it's trailing 12 months and then weighted average. And now, we're starting to see a kind of a pickup from -- you know, if you compare to a year ago.

So, pretty much, there is some positive signs of getting back into the deals, and we're starting to see the group cohorts that actually joined at the end of last year. Now, we are seeing the positive impact. And this is what drives civilization in the NDR that we are seeing. Still not calling a trend, but positive signs.

Jason Celino -- KeyBanc Capital Markets -- Analyst

Great. Thank you very much.

Operator

Next question comes from Robert Simmons with D.A. Davidson. Your line is open.

Robert Simmons -- D.A. Davidson -- Analyst

Hey, thanks for taking the question. 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 be able to pull into the core platform or into the product suite?

Roy Mann -- Co-Chief Executive Officer

Yeah, can you repeat that first part of the question? There was some break up --

Robert Simmons -- D.A. Davidson -- Analyst

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

Roy Mann -- Co-Chief Executive Officer

Yeah, so we see a good traction with our marketplace, and we see some apps being more popular than others. I think the most popular apps we're seeing right now are additional capabilities on top of the monday.com platform to kind of finalize our use cases. Definitely, you know, it opens up opportunities in terms of additional features that we can add to the platform, or maybe, you know, even thoughts going forward about potential acquisitions or expanding our capabilities as a platform. But nothing significant that I can point on right now in terms of specific product features or capabilities.

Robert Simmons -- D.A. Davidson -- Analyst

Got it, Roy. Thank you very much.

Operator

[Operator instructions] There are no further questions at this time. [Operator signoff]

Duration: 0 minutes

Call participants:

Byron Stephen -- Director, Investor Relations

Roy Mann -- Co-Chief Executive Officer

Eran Zinman -- Co-Chief Executive Officer

Eliran Glazer -- Chief Financial Officer

Kash Rangan -- Goldman Sachs -- Analyst

Pinjalim Bora -- JPMorgan Chase and Company -- Analyst

Jackson Ader -- MoffettNathanson -- Analyst

Steve Enders -- Citi -- Analyst

Arjun Bhatia -- William Blair and Company -- Analyst

Derrick Wood -- TD Cowen -- Analyst

Brent Thill -- Jefferies -- Analyst

George Iwanyc -- Oppenheimer and Company -- Analyst

DJ Hynes -- Canaccord Genuity -- Analyst

Andrew DeGasperi -- Berenberg Capital Markets -- Analyst

Rob Morelli -- Needham and Company -- Analyst

Jason Celino -- KeyBanc Capital Markets -- Analyst

Robert Simmons -- D.A. Davidson -- Analyst

More MNDY analysis

All earnings call transcripts