Good morning or good afternoon, all, welcome to the monday.com Q4 fiscal year 2022 earnings conference call. My name is Adam, and I'll be your operator today. If you'd like to ask a question during the Q&A portion of today's call, you may do so by pressing star followed by 1 on your telephone keypad. I will now hand the floor over to Byron Spratt to begin. Byron, please go ahead when you are ready. Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for monday.com's Q4 and fiscal year 2022. 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 Q4 and fiscal year 2022 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 on the investor presentation for today's call, which are posted on our investor relations website. Now, let me turn the call over to Roy. Thanks, Byron, and thank you everyone for joining us today. Fiscal year 2022 was a year of significant accomplishments at monday.com. We finished the year more energized than ever with strong financial results, improved efficiency, and continued product innovation. We put this progress on display at our Elevate 2022 world tour, where we had the opportunity to meet with customers and partners in person. We also announced plans to launch monday DB, which will upgrade our infrastructure, drive faster board performance, and provide even more flexibility. monday DB will enhance the way Work OS engine run and store data, ensure that our platform is schemaless, completely flexible, and built for infinite scale, supporting 100 times larger boards. Q4 capped off an amazing year with strong revenue growth and free cash flow expansion. We finished the quarter with $150 million in revenue, $30 million in free cash flow, and achieved positive adjusted operating profit for the first time. New customer demand trends also continue to be strong. In FY 2022, we added 34,000 net new customers to monday.com family. Our fastest-growing customer segments remained enterprise, where we grew customers by 86% to 1,474 customers. While we are seeing healthy new customer demand, we continue to see competitors significantly reduce their performance marketing efforts. As a result, we have been able to build market share and improve overall customer acquisition efficiency. Our results demonstrate that monday.com continue to drive growth and profitability at scale. Since inception, the company has now generated more than $5 in ARR for every $1 in cash burned. Regardless of macro uncertainties, we believe we are well-positioned for the road ahead. Let me now turn it over to Eran to walk you through some of our business highlights for the year. Thank you, Roy. Fiscal year 2022 was another year of phenomenal growth at monday.com, both financially and business-wise. We ended the year with $519 million in revenue, up 68% year-over-year, improved overall efficiency, and achieved positive free cash flow for the second year in a row. Fiscal year 2022 was also a transformational year for our product. We've received incredible feedback on our new Work OS product suite, particularly on monday sales CRM. As a reminder, CRM has only been made available to new customers, and we finished 2022 with 2,458 new monday sales CRM accounts. The fast adoption and strong customer feedback of monday sales CRM has been amazing. Customers tell us they love monday sales CRM as it's more customizable and easier to use than any traditional CRM tools. As we begin to slowly roll out monday sales CRM to our existing customers, we remain focused on adding more powerful features and functionality to make it the best CRM in the industry. As Roy mentioned, our strong growth continues to be led by enterprise customers. This quarter, we're particularly excited to announce that one of the world's leading banks recently adopted monday.com. With a goal to move away from multiple work management and legacy communication tools, monday.com proved to be the best fit for the company. To date, over 1,000 users across multiple teams have adopted monday.com, and we are seeing the power of our Work OS enabling collaboration and efficiency. We also made significant progress in expanding our marketplace. In fiscal year 2022, we increased the number of marketplace apps to 217, including 61 monetized apps. As we look to accelerate efforts in building out the marketplace, we're excited to announce a new partnership with Appfire, the world's largest enterprise collaboration app provider. With a track record of creating easy-to-use, powerful, and reliable apps for the world's most reputable tech companies, Appfire will allow us to build on our strong foundation and take our marketplace to the next level. With that, let me now turn it back over to Roy. Thank you, Eran. As we turn our attention to the next fiscal year, we are highly confident in meeting our goals. There's a lot we plan to accomplish. In FY 2023, we will be focused on remaining the market leader in work management space. To accomplish this, we will continue to give our users exceptional customer experience with easy-to-use and intuitive products. We plan to enhance our upmarket efforts through building and scaling our platform and product suite and expanding existing channels that will allow us to build market share. We expect to accomplish all this while being committed to improving efficiency and delivering positive free cash flow for the third straight year. In closing, Eran and I want to thank the entire monday.com team for your amazing work in making 2022 our most successful year yet. Now it's full steam ahead into an exciting 2023. With that, I'll now turn it over to Eliran to cover our financials and guidance. Thank you, Roy. Thank you to everyone for joining our call. Today, I'll review our Q4 and full year 2022 results in detail and provide initial fiscal year 2023 guidance. We finished fiscal year 2022 exceptionally strong. Total revenue in Q4 2022 came in at $149.9 million, up 57% from the year ago quarter, and at $519 million in fiscal year 2022, up 68% from the prior year. Excluding the impact of foreign exchange, revenue grew 60% year-over-year in Q4 2022, and 71% year-over-year in fiscal year 2022. Our overall net dollar retention rate remained steady in Q4 2022, reflecting our focus on the organizations with the highest expansion potential and continued resilience through a more challenging macroeconomy environment. We experienced a decline in net dollar retention for our largest customers, reflecting slower seat expansion in the upmarket. As a reminder, our net dollar retention is a trailing Q4 weighted average calculation. For the reminder of the financial metrics disclosed, unless otherwise noted, I will be reflecting non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financial in our earnings release. Q4 gross margin was 90%. In the medium to long term, we continue to expand gross margin to remain in the high 80% range. Research and development expense was $24.7 million in Q4 2022, or 16% of revenue in line with the year ago quarter, and $94.1 million in fiscal year 2022, or 18% of revenue, up from 17% in the prior year. We plan to invest significantly in R&D in fiscal year 2023 as we build out our product suite and scale our work operating system platform both horizontally and vertically. Sales and marketing expense was $80.9 million in Q4 2022, or 54% of revenue, compared to 73% in the year ago quarter, and $358.6 million in fiscal year 2022, or 69% of revenue, compared to 79% in the prior year. G&A expense was $15 million in Q4 2022, or 10% of revenue, compared to 12% in the year ago quarter, and $57.3 million in fiscal year 2022, or 11% of revenue in line with the prior year. Net income was $22.2 million in Q4 2022, and the loss of $33.4 million in fiscal year 2022. Diluted net income per share was $0.44 in Q4 2022, and -$0.73 in fiscal year 2022, based on 50.4 million and 45.8 million fully diluted shares outstanding, respectively. Total employee headcount was 1,549, a decline of 3 employees since Q3 2022. Looking to next year, as we build our platform and product suite, we expect to continue hiring for our R&D and product teams. Moving on to the balance sheet and cash flow. We ended the quarter with $885.9 million in cash and cash equivalents, up from $852.6 million at the end of Q3 2022. In Q4 2022, adjusted free cash flow was $29.7 million. adjusted free cash flow margin, as defined as adjusted free cash flow as a percentage of revenue, was 20%. In fiscal year 2022, adjusted free cash flow was $8.1 million. adjusted free cash flow margin was 2%. Fiscal year 2022 marks our second consecutive year being adjusted free cash flow positive. We anticipate to be adjusted free cash flow positive in fiscal year 2023. Adjusted free cash flow is defined as the net cash from operating activities, less cash used for property and equipment and capitalized software cost, excluding non-recurring items. Let's turn to our outlook for fiscal year 2023. For the Q1 of fiscal year 2023, we expect our revenue to be in the range of $154 million-$156 million, representing growth of 42%-44% year-over-year. We expect a non-GAAP operating loss of $19 million-$17 million and a negative operating margin of 13%-12%. For the full year 2023, we expect revenue to be in the range of $688 million-$693 million, representing growth of 33%-34% year-over-year. We expect the full year non-GAAP operating loss of $36 million-$32 million and a negative operating margin of approximately 5%. I'll now turn it over to the operator for your questions. Thank you. As a reminder, if you'd like to ask a question today, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure your headset is fully plugged in and unmuted locally, all questioners are asked to limit themselves to one question and one follow-up so we can get through the queue in good time. That's star one to ask a question and star two to withdraw. Our first question today comes from Kash Rangan from Goldman Sachs. Kash, please go ahead. Your line is open. Hi, Kash, your line is open. Please go ahead with your question. Moving on. Our next question is from Pinjalim Bora from JPMorgan. Pinjalim, please go ahead. Your line is open. Okay. Hey, thank you. Congrats on the quarter. Seems like a, seems like a good one. I want to understand the guidance a bit, Eliran, if you could tease out maybe the assumptions behind the guidance. Do you expect expansions to kind of continue to deteriorate or new logo growth to kind of slow? Are you assuming the macro kind of to stay the same or take a step down? Trying to understand if you're baking in a little bit of more conservatism than usual for this year? Hey. Hi, hi Pinjalim. It's Eliran. Thank you for the question. What we took into account for guidance, you know, we always take into account the latest trends that we're seeing. As we said, there is some challenging macroeconomic conditions, without pressure on NDR. You know, but on the other side, we see a consistent top of funnel demand. The reason why NDR is slowing is the fact that we see less of from everything functions. Sure. -on their budget. We took it into account as part of the guidance that we provided for the year. In addition to that, we're seeing improving overall efficiency and the fact that we're also generating cash also took into account as part of the guidance. You know, we feel comfortable with what we provided, number that we can achieve. Okay, understood. On the CRM, customer growth seems pretty interesting, really solid. Wanted to ask you, I mean, it seems like almost 12% to 13% of your new, total new customers added in the year was CRM. Want to understand what's kind of the typical size of customers that you're landing CRM with and if you're seeing any kind of interesting expansion characteristics with those, as they kind of understand how to expand Monday beyond CRM? Yeah. Hi, Pinjalam. This is Eliran. As we mentioned previously, right now the CRM product is mostly offered to new customers. We didn't offer it to existing customers. In terms of new customers, we get a mixture of both, you know, SMBs, but also mid-size and larger organization adopting the product. We're very happy and excited with the results. The momentum is great with that product and also the feedback that we get from customers. And we kind of predict this momentum to continue into next year. Right now we get a healthy mixture of both, small and medium-sized customers into the pipeline. Got it. I'll get back in the queue. Thank you. The next question is from Brent Bracelin from Piper Sandler. Brent, please go ahead. Your line is open. Thank you. Good morning. My question really is around monday sales CRM, monday marketer. They showed up on G2 as one of the fastest growing new products in categories. Could you just talk a little bit about the momentum you're seeing in marketer as well as sales and what's really driving that? Is there a price point that seems to be resonating with customers? Then talk a little bit about when you plan to roll that out to existing customers. I know that was only for new customers only. When do you roll it out to existing? Thanks. Yeah. Thanks, Brent. This is Eliran. Thanks for the question. We mentioned previously that about 50% of the new paying customers are CRM customers, but the remaining 50% are split between the monday marketer and the monday dev. Definitely we highlighted the CRM because it has the most momentum, but also the two other products also have great momentum that we're seeing. In terms of releasing those products to existing customers, we plan to do it at the end of H1, mid-year this year. Just to your comment about the G2 rating, I think this shows exactly our strategy that because those products are built on top of the Work OS platform, they already pretty mature. They offer a lot of advanced features, and we're able to compete in each one of those markets, and achieve high rating within customers, which is perfectly kind of what we expected and big part of our strategy as we build those products. The next question is from Steve Enders from Citi. Steve, please go ahead. Your line is open. Okay, great. Thanks for taking the question. I guess I'm gonna ask a little bit on the outlook on the EBIT line and, you know, the strong upside we saw there in the quarter. I guess how should we think about the kind of puts and takes of where you're investing in incremental OpEx and maybe where there might have been a little bit of pullback from what you're expecting in 4Q? I guess, you know, similarly for the outlook, is there, you know, a pause in maybe some investments that you're making on the head count side or just anything that we should be thinking about as we think about the EBIT outlook for the year? Thanks. Hey Steve, it's Eliran. With regards to the Q1, you know, we provided operating profit that mostly driven by the fact that we beat on the revenue side. We saw a lower S&M spend, you know, due to the fact that it cost us less to acquire customers. It can be because some of the competitions or the competitors that we stated pulled back, and we believe this is an opportunity for us actually to take market share and to grab land. Some of the hirings that we wanted to do in Q4 were delayed to next year. We would like to focus on hiring people for engineering and product. This is an area that we will continue to invest. In addition, in Q4, as part of your year-end audit, there is always kind of reversal for some stock pools that you are doing throughout the year. Nevertheless, I would like to emphasize that from our perspective, you know, we are going now into Q1. We will continue to invest still in an efficient manner. You know, with regards to overall EBIT that you were asking, we are currently consistent with our original plan to reach profitability bar before 2025, sustainable. With regards to free cash flow, we said that we are going to be free cash flow for the entire year, not only in H2. Okay, perfect. That's helpful context there. I do want to ask on the marketplace side and the new relationship with Appfire. I guess, how do you kind of view the marketplace opportunity, you know, evolving and moving forward? How do you think about, you know, outside partners and third parties building applications and use cases versus kind of what you would build in-house? Thanks. Hi. Thank you. It's Roy. We really care about the marketplace being a huge growth engine for us. We wanna invest a lot in partners joining us. Appfire is a great partner to have. Our vision here is to build a very large and robust ecosystem around us. The way we're doing it, I think, is unique, is that we're opening the platform up completely. Just as an example, application developers can create now first-class citizens within the platform. It's not something that is second grade or, like, hidden. Okay? They can really build on top of the platform, like we do, and we really open up completely. I think they feel that, and they feel they're that we are a great partner to build upon. Okay, great. Thanks for taking the questions. Thank you. We have a question from Kash Rangan from Goldman Sachs. Kash, please go ahead. Your line is open. Hi, good morning. Thank you very much. Congratulations on the quarter. terrific work, team. I'm curious to get your perspective on monday DB. I know that it's gonna be rolled out in 2024. what's the initiative based on any specific customer feedback, or is it something that you're doing more proactively? What are the kinds of customers that you hope to land with monday DB, the enhancements you're putting into that you could not otherwise previously get? Also with this partnership initiative where you're opening up the platform for partners to develop kinds of applications, new kinds of applications, what is your goal here? Is it the long tail of apps that you don't have the resources development that you hope the partners can get you into new markets, or is it new geographies, or is it just to open up the platform even more to existing customers so they can exploit the new capabilities more? Curious to get your take on what you want to accomplish with the opening up of the platform initiative. Thank you so much. Very cool. Hey, Kash. It's Roy. Thank you for the question. monday DB is something that is in the core of our infrastructure. Like, we've always highlighted how being schemaless and how we build the platform on top of a solid backbone that enable our customers to build whatever they want. monday DB is the next phase of that. We wanna make it more scalable. Like a lot of customers tell us, we're doing, like, They can do flip-flops with monday. They can do whatever they want. It's magic. I think where monday DB comes in, it takes that magic in a scalable way and allows to build, like, way bigger applications on top of us. That opens up the door for larger installment, like different use cases that requires, like, millions of rows, which it opens the door for larger customers in many ways. Again, it's like an infrastructure move to move us to the next level. Regarding the marketplace, what we think is that, first of all, when we started it, we just wanted to open it up to everyone and see what they do, and they surprise us all the time with what they're doing. I think you nailed two of the great points. Like, one is obviously, the long tail, solving a lot of problems we would not get to for our customers. Another thing is, go to market. Like, they market those solutions and bring us a more audience. I think a third thing, which is very important, is the fact that our customers choose us when we win the deals because they see that they can build the future on Monday. Even if they don't know exactly what they need to build now, they know they, whatever They'll never hit a wall because the platform is open, and they can always take a partner to build whatever they want. They can connect bespoke software and a lot of those stuff. In that respect, it's also super important for us. Those are great moves. Thank you so much, and congratulations again. Very happy to see this. Thank you. Thank you The next question is from Jackson Ader from SVB Securities. Jackson, please go ahead. Your line is open. Great. Thanks for taking my questions, guys. The first one is on the commentary on net dollar retention rate and specifically in the high end, that's kind of 50,000 and above. What is kind of driving weakness there? Is it just people not expanding upon their annual renewals as much as you thought? Is there any downshift in terms of the number of seats that some of your customers? Just interested in those dynamics. Hey, Jackson, it's Eliran. You know, as a reminder, with the enterprise accounts, we're coming off historical highs. What we see is basically, I think this is something that we started seeing also last year, larger customers become more cautious with their budgets. It's mostly seeing a slowdown in expansions of seats. On one hand, we see a very healthy traffic of new customers, new logos that's actually buying monday.com software. On the other hand, you see the amount of expansion within existing customer base, mainly the big ones, is less than what you used to see in the past. We believe it's current macro uncertainty that has been driving most of this behavior. On the other end, you know, the positive is that overall NDR remains steady at 120%. The growth churn has held up well, and we're still seeing, as I said, solid new customers demand. We would say that by the end of this year, we expect additional probably decline, you know, due to mostly to the macroeconomy headwinds. Okay. Actually, if we just stick a little bit on that theme, but maybe geographically speaking, Europe has held up maybe better than what we expected, you know, just dropping in the revenue mix by only 1% year-over-year. I'm just curious in that geography, what you guys are seeing and maybe, you know, whether it's kind of out or underperformed your expectation in 2022 and what we should be thinking about for 2023? Maybe just to take a step back, as a reminder, you know, 70% of our customers are non-tech and 30% is tech. When you think about the softness in demand that we saw last year, it mostly was around tech. When you think about Europe, we said that we see a more of a less of an impact of what potentially others are seeing because the level of exposure that we have. I think that we don't see significant changes to what we saw in the past. It's relatively stable. Actually getting into the new year, we see even some positive signs yet to be seen for the remainder of the year. Okay. All right, great. Thank you. The next question is from George Iwanyc from. George, please go ahead. Your line is open. Thank you for taking my question. Congratulations on the results. Roy or Eran, maybe if you can give us some more color on the competitive space. You know, you continue to add a solid number of new customers. Are these lands mostly new and, you know, are you seeing displacement from other work management solutions or mostly from productivity tools? It appears we have lost connection with the speaker team. Please stand by while we reconnect them. Thank you for your patience. We are now reconnected with the speaker team. George, your line is open. All right. Thank you. Roy or Eran, I basically was asking about the competitive environment. The, you know, the pipeline generation you see, is that mostly still greenfield, or are you displacing other productivity tools or work management tools at this point? Hi, it's Roy, and sorry for the disconnect. When we're looking into new customers that join the platform, we still see it as greenfield. Also the majorities of the deals we do are not against any other competitor. Within the ones that we do compete with, someone, we win mostly because of our Work OS, because they want the platform, they want the fact that they can do any, a lot of things with it towards the future. Okay. Eliran, maybe digging into the hiring that you expect to do this year, you know, how front-loaded is that, and what things will you be monitoring to kind of judge the pace of future hiring in upcoming quarters? You know, George, just to relate to that, we are mostly focused on building out the platform and product offering, so the focus will be mostly on R&D and product. You know, different to prior year, we are going to hire probably around 10%, give or take, based on our needs. It's not going to be necessarily front-loaded. Maybe there is going to be a slightly skewed towards H1, but overall, we are expecting a more of a balanced hiring process throughout the year. Obviously, if we need to hire more, then we'll make decision as we progress. Thank you. Thank you. The next question comes from DJ Hynes from Canaccord. DJ, please go ahead. Your line is open. Hey, good morning, guys. Maybe just building off that last line of thinking there, Eliran. I mean, in the shareholder letter, in your prepared remarks, it says, you know, one of the focus areas this year was to expand the up-market growth engine. You know, you had the great slide in the deck that shows your efficiency metrics are hanging in there really well. Clearly, there's uncertainty out there. Just help us understand kinda how you're thinking about executing on the go-to-market side of things, hiring there, kind of what are the key initiatives we should be watching for this year? Hi, this is Eran. Thank you, DJ. In terms of our go-to-market, we have a bunch of plans. Definitely the new products are a great way to expand our go-to-market. The fact that we can now market specifically the CRM product, dev product, the marketing product, just opens up monday.com to new audiences, a new type of buyer. Just as a reminder, you know, once a customer starts using one of those products, they can expand to additional products and eventually get the whole company into the monday Work OS platform. Definitely this is a big game changer for us in terms of our ability to go to market different kind of buyers, different personas within the organizations. Also, this year we're gonna double down on our outbound motion, so expand our channels, marketing channels, do some more B2B enterprise-focused marketing. All those efforts together will allow us to continue and execute. In addition to the great momentum we already seen with performance marketing that we mentioned, given that most of the other players in the market have pulled back, we're able to achieve now a greater market share and greater efficiency. Combine all those things together, we see great momentum in terms of acquiring new customers. Maybe DJ, this is Aleron. Yeah. Sorry, DJ, just to add to what Eran said. Last year, we hired, you know, we increased the headcount in more than 50%, and we believe we are now well-positioned to grow to 2023 and beyond in terms of sales and marketing headcount, you know, with regards to going up market as well. Yeah. Yeah. Okay. Great color. Thank you, guys. The next question is from Derrick Wood from Cowen and Company. Derek, please go ahead. Your line is open. Great. Thanks, and congratulations as well. I guess just to follow up to that, you did hire your first ever CRO in November, just kind of wanted to hear what the kind of impetus was to bring on a CRO and what changes he may be making on the go-to-market side? Yeah. Thanks, Derrick. This is Eran. Actually, Yoni, our CRO, was actually promoted from within the company. He was managing both the sales team and the marketing team. We promoted him to be the CRO of the company, basically adding also the management of the customer success group and the customer support, in addition to our partners group. First of all, you know, we're really proud of Yoni. He's been doing a phenomenal job. He basically himself created a whole sales team from scratch and done a great job. With this change within the company, we believe this will allow for better collaboration between the different teams, this will drive greater efficiency, you know, the teams working together, and more optimized go-to-market. The fact that he have a such a wide look, any starting from the marketing team all the way to the sales and partners just gives so much energy to all the teams and much better collaboration. We're already seeing the fruits of that, and I feel that going into 2023, this will even create greater efficiency within those teams. Got it. That's helpful. Just maybe a follow-up. It sounds like from a macro standpoint, you're not seeing a whole lot of headwind on the SMB side. It's mainly just from slower expansion activity in the up-market customers. Why, I guess why is it that you know, we've heard, you know, more pressure from SMB from other companies. Why is it that it sounds like you're seeing more stability on the SMB side? Hi, that's Roy. It's really hard to say, but I feel that like SMBs want to consolidate on and, you know, have a product that solves more problems for them. That's typically the case, and Monday is obviously the tool of tools, and they can do so much with us. Having said that, the situation there is very stable, like you said, and we do see a very healthy top-line demand, as Eran mentioned, with our performance marketing and getting new customers to join Monday. Well done. Thanks. Thank you. As a reminder, star one to ask a question today, and participants to ask to limit themselves to one question per person. The next question is from Fred Lee from Credit Suisse. Fred, please go ahead. Your line is open. Very nice quarter. Thank you for taking my question. I noticed R&D in dollar terms declined sequentially for the very first time. I was wondering if you could talk about how we should think about leverage going forward, especially as you add new features and roll out CRM to existing customers and investing in new products like monday DB. If you could also share year-end headcount R&D. Thank you. With regards to R&D, Fred, it's Eliran. The Q4 is 18% for the year, it's 16% for the Q4. Reason why, it's mainly due to the fact that we did some cost adjustments at the end of the year. There is the impact of the Israeli, you know, dollar shekel exchanges because the dollar was strong. On this front, in Israel, with all the R&D based in Israel, you get benefits on the payroll, which is most of the cost for R&D. When you think about going into 2023 and 2024, we are in accordance with our long-term operating plan, which was around 22%-24%. We believe it's going to be on the lower side of it, around roughly 20%. We're never very significant in terms of R&D as percentage of revenue, and this is pretty much the kind of the ballpark I would assume that we need to maintain. Obviously, if we will need to invest further on the platform and on monday DB, as we said, already took it into account. If we feel or we see that we need more resources and more headcount, then there is no, you know, we will obviously hire then. Thank you. Also the year-end headcount, if you don't mind, in R&D. The year-end headcount, yeah. The problem is north of 300. I don't remember the exact number. Yeah. But maybe just to add to Eliran, to give you perspective, vast majority of the hiring for 2023 is gonna be focused on R&D resources. For us, this is the main part of the business we plan to expand next year and put most of the efforts and the budget into. We're continuing, and like always, we're gonna deliver with very high execution also in 2023. We have very big plans. Okay. That's very helpful. Thank you. Thank you very much. Great quarter. The next question comes from Brent Thill from. Brent, please go ahead. Your line is open. Thanks. Just back on the guidance, I just wanted to better understand what you're embedding for the year in terms of macro or SMB churn. It's pretty drastic slowdown in growth. Is this just good old-fashioned conservatism, or are you baking in anything else to give yourself a little wiggle room? Brent, it's Eliran. We believe this is going to be pretty much the same macro economy conditions that we see now. They will persist by the end of the year. We took it into account. We did also take into account some slowdown we see on NDR from enterprise accounts. It's also baked into the numbers. Other than that, we believe that the guidance, you know, is consistent with what we see as of now and, you know, also with improving overall efficiency on one hand, but the challenging macro economy. We feel this is a number that we can achieve. That enterprise slowdown, is that just as it relates to the macro having to hold on those customers slowing, or is there something from an internal execution that you'd like to do better there? Yeah. This is Eran. Thanks, Brent. I feel it's more about the macro environment and the fact that those enterprise are a bit more cautious, going into 2023, maybe slowing down hiring. Just as a reminder, the way we charge customers is per user, so the fact that they might be slowing down hiring might have an effect here. Definitely we're also seeing some optimism and some, you know, good momentum as we start the year. I think there's some optimism bake into that, going forward. Thank you. The next question is from Arjun Bhatia from William Blair. Arjun, please go ahead. Your line is open. Hi, Arjun, your line is open. Please make sure you're not muted locally. Hello, can you hear me? All right, perfect. Yeah, Arjun. Y es, yeah. I think you can. All right. Thanks, guys. My congrats on a good quarter. I wanted to touch on the product verticalization efforts. I think you mentioned that a little bit in the shareholder letter, but I'm curious what your roadmap is on verticalization and maybe what role the partners can play there, if any, in helping to reach verticals where you may not have a presence right now. Hi. Thank you. It's Roy. We are relying a lot on the partners to both expand our marketplace offerings and also to provide a lot of services and help us with customers in territories we are not present in. I think it's a great power that we have, that we have so many engaged partners. Just recently, a lot of them, like 170 of them flew in to Israel. We had a large event here, and it was very exciting to see how they're going to build on us and, you know, really we shared with them the roadmap of the marketplace and how much they can do there. It's really exciting. Maybe one follow-up for Eliran. As you think about just the sales and marketing spend going into next year, obviously you're seeing efficiency there on customer acquisition, but how do you think about the trade-off between performance marketing and sales-led spend on the go-to-market side in 2023? Hey, Arjun. The short answer is that, it will be pretty much in the same, ratio that we saw in the past. I would say around 30% is going to be, performance marketing based on efficiency, and around 70% is, sales and partners. This is kind of the ratio that we believe is going to continue also this year. Okay, perfect. Thank you, guys. The next question is from Robert Simmons from D.A. Davidson. Robert, please go ahead. Your line is open. Hey, nice quarter, and thanks for taking my questions. I was looking at your retention number for specifically in the large enterprises and what you disclosed as a Q4 number. Can you talk about what you actually saw in the quarter itself in terms of how that trended in the December quarter, and then also the customer growth retention and what you saw there? Hey, Robert, it's Eliran. From an overall, you know, the NDR remains steady with for the entire population with 120%. Growth churn has held up well. We're still seeing solid new customer demand and overall seats keeps growing. On the larger accounts, we saw a decline. As I said at the beginning of the call, the reminder is that we're coming off historical highs. We see larger customers that become more cautious with their budgets. They are more conscious with the level of spend, we do see a slowdown in expansion of seats, mostly driven, we believe, by current macro uncertainty that is driving this behavior. Would it be possible to get any quantification on any of those factors or, if not? Thanks. Can you repeat the question, please? Would it be possible to get a quantification on any of those factors in the quarter? Don't have it right now with me, you know, the quantities of each contribution. To the NDR? Yeah. The larger one would be the slowdown in expansions. This is the main factor that drove the NDR. You can see that the NDR of larger customers slowed down more sharply than the other ones. Great. Thanks. The next question is from Jason Celino from KeyBank. Jason, please go ahead. Your line is open. Hey, thanks for fitting me in. You know, very nice to see, you know, the customer win at the major financial institution, the prepared remarks. When we think about the slowdown in the seat expansions at the enterprise, has it been mainly limited to your tech exposure? Curious there. Thanks. Thanks, Jason. This is Eliran. Again, like the thing that drives NDR up is mostly companies expanding, meaning hiring more people, getting more people on board into the product. Definitely the tech sector is suffering more, just as a reminder, it's only 30% of our customers. The other 70% were less impacted, it's something we are seeing across the board within companies. Again, it's hard to tell how much is that larger organizations being more cautious and how much is that will stay with us going into 2023. This is the current trend we're seeing. Okay, great. If I were to kind of summarize, you know, the top of funnel trends, it sounds like things are still, you know, very strong. I'm curious on like the linearity that you saw in Q4. I guess how did, I mean, that top of funnel look in December versus maybe early in the quarter? Thank you. Yeah. Hi, it's Roy. Historically, we've seen that the Q1 is much stronger, people coming back from vacation and New Years. This Q1, we actually anticipated it'll be less strong than it is. We do see it as a very positive sign. We see a very strong demand. You know, so that's like super positive for us. Great. Thank you. The next question is from Andrew DeGasperi from Berenberg. Andrew, please go ahead. Your line is open. Thanks for taking my questions. I guess I know you talked a lot about net retention rate, and I know this being a 12-month trailing metric. I guess what I'm trying to get at is this metrics going to step down sequentially for the larger cohorts, you know, the over 10 users? Hey, this is Eliran. Yeah, we anticipate that it might go down in the larger accounts between 5%-10% more this year. There is a lagging effect, having in mind due to the trailing 12 months, and we're counting at weighted average. obviously the impact is going to be throughout the year. I believe this is probably the trend that we're seeing. Thanks for that. Secondly, on the sales and marketing savings, I know you mentioned performance marketing, competitors pulling back. I just wanted to dig a little deeper in terms of who those competitors are. Are we talking about other collaboration work management platforms? Is it a bigger cohort of that? Hi, it's Roy. Generally when we say that, we mean the overall competition on the keywords and on those ads. We don't necessarily know who they are. We just see that we are getting more customers for less money. The next question comes from Shebly Seyrafi from FBN Securities. Shebly, please go ahead. Your line is open. Thank you very much. It looks like you're going to be hiring in product and R&D in 2023. Does that mean you're going to have lower sales and marketing headcount at the end of 2023? Just talk about how you intend to invest in sales and marketing this year. Hey, Shebly, it's Eliran. Yeah, we said that we are going to focus on product and R&D. It's not necessarily mean that we're going to have lower head count with the sales and marketing. If we need to hire, there is going to be hiring there as well. Currently we are, you know, continuing with the number that we have, but we see the bulk of the investment in R&D. Okay. All right. I just wanna elaborate on the competitor pullbacks. You just answered it a prior question, but just if you can elaborate on that. For example, do you have a number of competitors that you saw pull back? When did you see it if there was a time that was more noticeable? What is your response? Are you going to be more aggressive now against your competition? Just describe how you might become more so. Thank you. Hey, Shebly. It's Roy. Yeah, I'll elaborate more on that. Essentially, we bid on ads in Google, in Facebook, in YouTube, in all those areas of performance marketing. We see that we can get the same ad placements for a lower cost. That's essentially what we say when we say less competition. Like to be in first place, we need to pay way less. We get a lot more customers because of that. Our approach is that we have a BigBrain, we have our own measurement internal measurement tools that we've built that show us exactly the ROI on every $1 we spend on marketing. We know what's working. If there is a campaign that is working less good, we will lower the bid automatically almost. I think this is a competitive advantage we have over others, where they needed to cut back, so they just did, and we know what's working. What's happened is that we've even increased the budget we have for performance marketing in January and February because we know and we see what's working, and we have internal predictions to what we'll get out of it. I think we're doing it super responsibly. We know exactly what the ROI is and, you know, that's the strategy and what it's been up until now. The next question comes from Scott Berg from Needham. Scott, please go ahead. Your line is open. Hi, everyone. Congrats on the strong quarter, thanks for taking my questions. I guess I'll leave you with one in essence of time here. Given the success that you've had on the marketing side, those numbers have actually trended down all year, I know after the large Super Bowl ad last year, it sounds like FX was a benefit in the quarter. I guess why not step on marketing a little bit more? If the cost to customer acquisition is actually coming down, you continue to have success there and the competitors are pulling away, why not take this opportunity to even capture more market? Thanks. Hi, Scott. It's Roy. Yeah, we have been doing that up to the point that we are comfortable with the results. That's what BigBrain does. Like, it shows us exactly how further we can step on the gas, and we have. There isn't any point in extending it more. Either there is no 'Cause we won't see the results that we want if we push it further. We have, and we have extended the marketing. Scott, just to add to what Roy said. From our perspective, you know, this is what we're also going to look at this year. If we see the opportunities, continue to see the opportunities, with efficiency, then we are not going to pull back. We're actually going to, you know, push on the, on the gas in order to generate more leads and more growth for the business. Great. That's all I have. Thanks for taking my questions. The final question today comes from Ivan Feinseth from Tigress Financial Partners. Ivan, please go ahead. Your line is open. All right. Thank you for taking my question, and also congratulations on the great quarter and great year. Can you give us some, you know, insight or discussion on some of your AI initiatives and potential AI integration capabilities onto your platform? Hey, Ivan. It's Roy. It's obviously been amazing, right? Like, such a huge change in such a short time in AI. Now that we see that like, the barrier was lowered so much to create such powerful AI tools, what we naturally do at Monday, we open up the platform and allow anyone to build on top of that. We have already added many layers that enable anyone, including us, to build AI tools on top of Monday. We'll soon have an AI hackathon where we'll invite anyone to build on top of the platform and essentially have a dedicated section within the marketplace for any AI tool that can benefit anyone. I think that's like super exciting, and we'll see like long tail solutions for specific industries and, you know, it's like, exciting. Yeah. Maybe just, this is Eliran, just to add more color. One of the main building blocks that we have in the platform is our monday Docs, and there we already saw a lot of potential use cases for using AI to generate automatic content, to summarize content within the board. Definitely, we saw some exciting POCs, and we're planning to expand, like Roy said, the platform and start with some off-the-shelf solutions to start with. All right. Thank you, and wishing you a big 2023. Thank you. Thank you. Thank you. This concludes today's Q&A session and thus concludes today's call. We thank you very much for your attendance. You may now disconnect your lines.