Monday.Com Ltd

NASDAQ:MNDY

Earnings Call Transcript 2021-Q3

[Operator]

Thank you for standing by and welcome to the monday.com Q3 Fiscal 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today’s conference call is being recorded.

I would now like to turn the call over to your host, Mr. Byron Stephen, Investor Relations Director. Please go ahead, sir.

[Byron Stephen, Director of Investor Relations]

Thank you. Good day everyone, and welcome to monday.com’s third quarter 2021 earnings conference call. Joining me today are Roy Mann and Eran Zinman, co-CEOs of monday.com and Eliran Glazer, monday.com’s CFO.

Earlier today we released our results for the third quarter. Our earnings materials are available on our investor relations website at ir.monday.com. There you will find the investor presentation that accompanies our prepared remarks and a replay of today’s webcast under the News and Events section. Certain statements made on the call today may 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 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 may 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 is posted on our Investor Relations website.

With that, let me turn the call over to Roy.

[Roy Mann, Co-Founder & Co-CEO]

Thank you, Byron, and welcome to the monday.com team. Thank you everyone for joining us today. During our first earnings call, we were thrilled to introduce many of you to monday.com and to share with you our thoughts on the company and the large opportunity ahead of us. Going forward, we will focus these calls on our most recent performance and our future expectations.

We invite those of you who are still just getting to know monday.com and our Work OS platform to visit our company and investor relations websites where we have many videos and lots of other content that should be helpful in understanding our company and our business.

Now let me briefly talk to you about Q3, which was another strong quarter of growth. Even more organizations used monday.com to create software that fits their needs. Revenue grew 95% year-over-year to $83 million, as we continue to drive growth through the acquisition of new customers and increase adoption and expansion within our existing customer base.

As mentioned previously, upmarket growth is one of our top priorities. I’m pleased to report that our expansion into the enterprise space continues to gain momentum. We ended the third quarter with 613 enterprise customers, up 231% from 185 in the third quarter of 2020. Additionally, we continue to expand within our existing customer base. Our net dollar retention rate increased in the third quarter, as a result of our ability to continue to deliver strong ROI and a great customer experience.

Net dollar retention for customers with more than 10 users improved to over 130%, and our net dollar retention rate for all customers improved to over 115%. As a reminder, our net dollar retention rate is a trailing four quarter weighted average calculation. Because of these outstanding results and our continued upward trajectory, we are raising guidance for the remainder of the year.

For full year revenue we are increasing guidance to a range of $300 million to $301 million, representing 86% growth for the year. Eliran will provide you with more details on our third quarter results along with full updated guidance.

I’ll now turn it over to Eran to give you some further highlights from Q3.

[Eran Zinman, Co-Founder & Co-CEO]

Thank you Roy. As we continue to take our product innovation to new heights, we give our customers more capabilities to easily build their perfect no-code, low-code work software. In Q3, we experienced a strong start to our new monday workdocs. launched new capabilities with My Work and introduced one of the first 2D work management apps in the Quest store at Meta’s recent Connect event.

Let me first touch on monday workdocs. In Q3, we launched workdocs, giving our customers the ability to manage their work, ideas, and data in an unstructured way. These are more flexible ways to onboard and adopt our platform, adding a new customer entry point.

To date, our customers are using monday workdocs for a range of use cases and industries, such as marketing, operations, CRM, and more. More than 40,000 existing customers are already using monday workdocs, with many using monday workdocs for core, complex workflows. Since our launch, our customers have created more than 300,000 workdocs on monday.com.

It’s amazing to see how much our customers love monday workdocs, and in line with our mission, we wanted to provide our customers with even more freedom to adjust monday workdocs to their business’s needs. That’s why we launched the capability to create layouts with monday workdocs. Layouts allow customers to create any kind of template with live data for their monday workdocs, such as a CRM contact page, a deal page, a marketing campaign overview, and much more.

Our no-code automations and integrations are used by the vast majority of our customers, 100% of our enterprise accounts use them, while 88% use more than 50 different automations. Over the past year, our customers have automated over 900 million actions using our platform.

Starting this quarter, we introduced the dynamic workflow builder enabling our customers to easily create, without any code, any kind of new automation or integration, no matter how complex they need it to be. Customers can now mix and match actions and triggers, without limits on the numbers of actions and triggers involved.

Developers can add their own no-code automations and integrations to create even more applications for our customers. Our dynamic workflow builder will completely take our automations and integrations to the next level, giving even more power to customers and developers.

We are excited to announce today the launch of My Work, a place for customers and organizations to centralize all items, whether it’s deals, campaigns, tasks or anything else -- associated with their account. This mega-table gives individuals within teams the ability to gather customized data across all business units. We believe My Work is another step in giving organizations the resources to improve operational efficiency and productivity.

Let me turn it back over to Roy to further discuss our expanding ecosystem.

[Roy Mann, Co-Founder & Co-CEO]

Thanks, Eran. We made steady progress during the quarter in growing our ecosystem and expanding our global footprint. During the third quarter, we signed a new global alliance agreement with Tata Consultancy Services, a leading global IT services, consulting and business solutions organization. TCS and monday will work together to innovate digital workflow and automation solutions, transforming workplace collaboration while ensuring regulatory compliance.

We also partnered with Hootsuite and Semrush, who have built apps on the monday marketplace, to help deepen the value for customers using monday for marketing operations. Partnering with our customers is key to molding our platform’s future together. Lastly, we expanded our workforce presence with additional offices in Tokyo and Sao Paulo. We will continue to invest in growing our ecosystem and workforce in order to serve the over one billion global knowledge workers.

Now, let me turn it back to Eran to discuss our operating highlights.

[Eran Zinman, Co-Founder & Co-CEO]

Thanks Roy. We had another outstanding quarter in terms of customer wins and expansions. These were broad-based across industry verticals, with major companies including Jamf, eBay, Cegedim and Outbrain. Let me briefly speak about Jamf and how their usage of our Work OS continues to evolve.

Jamf is the world's leader in Apple Enterprise Management, helping more than 57,000 companies, schools, and government organizations around the world manage and secure more than 25 million Apple services. Jamf's marketing team has been using the monday.com Work OS to increase collaboration and efficiency since 2019.

Recently they have added many more groups, such as product, engineering project management and sales enablement to the platform, allowing their 2,000 employees to work more closely together. This is another example of how monday.com can help high-growth global companies and we're very happy to be part of their growth and success.

Our exceptional third quarter results are further proof that our customers are seeing the value of using our Work OS. With the platform’s no-code capabilities, customers can adapt each building block to build software applications and tools that fit their desired use case and evolving needs.

Creating a great user experience is at the core of how our company operates, which was recently on display at Elevate, our flagship customer conference. At this year’s Elevate we were able to help even more customers reimagine the way that they work, with over 52,000 registrants from over 100 countries, over 3x the number of registrants from last year.

Additionally, we continue to make investments in our people and leading publications are taking notice. During the past quarter, monday.com was recognized by Fortune magazine as one of the Best Small to Medium Workplaces along with one of the Best Places to Work for Millennials.

I am extremely proud of our employees and where our company has come in a short amount of time. The opportunity ahead of us is huge. We believe that we are at the intersection of a number of work trends, no-code, low-code, massive digitization and the remote work, that positions our Work OS to become the market leader in our category.

I’ll now turn it over to Eliran to cover our financials and guidance.

[Eliran Glazer, CFO]

Thank you, Eran, and thank you to everyone for joining our call. Today, I’ll review our third quarter fiscal 2021 results in detail and provide updated guidance for the fourth quarter and full year fiscal 2021.

We were extremely pleased with the results of the quarter, which demonstrated continued high growth at scale across all fronts. As Roy mentioned, total revenue in the third quarter came in at $83 million, up 95% year-over-year, led by large expansions within our existing customer base and acquisition of new customers.

We continue to execute against an ambitious hiring plan. For Q3, we ended the quarter with close to 950 employees globally. This represents an increase of more than 50% from a year ago, with the majority of additions coming from R&D and sales & marketing. We plan to continue to make substantial investments in these categories for the foreseeable future.

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.

Gross margin came in at 90.2%, up from 87.1% in the year-ago quarter. Research and development expense was $14.3 million or 17% of revenue compared to 22% in the year-ago quarter. We will continue to invest purposefully as we position monday.com to drive durable growth and win in our large addressable markets. While we continue to invest significantly in R&D, the pace of our revenue growth has outpaced the investment growth.

Sales and marketing expense was $61 million or 73% of revenue compared to 128% in the year-ago quarter. The improvement was driven primarily by continued efficiencies as we continue to scale our sales and marketing spend to focus on customers with 10 plus users and enterprise customers. Similar to R&D, the pace of our revenue growth has outpaced the investment growth.

G&A expense was $9.1 million or 11% of revenue, compared to 9% in the year-ago quarter reflecting increased costs of being a public company. Operating loss was $9.4 million, and operating loss margin improved to negative 11%. Net loss was $11.4 million and loss per share was negative $0.26.

Moving on to the balance sheet and cash flow. We ended the quarter with approximately $876.2 million in cash and cash equivalents. Net cash provided by operating activities was $3.8 million in the quarter.

Adjusted free cash flow was $2.9 million and was driven by strong collections stemming from our continued strong billings. Adjusted free cash flow is defined as net cash from operating activities, less cash used for property and equipment and capitalized software costs, excluding non-recurring items such as costs related to the build out of our corporate headquarter office in Tel-Aviv.

Now turning to our outlook for the fourth quarter and the full year 2021. For the fourth quarter of fiscal year 2021, we expect our revenue to be in the range of $87 million to $88 million representing growth of 74% to 75% year-over-year. We expect a non-GAAP operating loss of $23 million to $22 million.

For the full year 2021, we are raising guidance and now expect revenues to be in the range of $300 million to $301 million, representing growth of 86% to 87% year-over-year. We expect a full year non-GAAP operating loss of $65 million to $64 million and a negative operating margin of 22% to 21%. As our guidance indicates, we expect to end 2021 on a very positive note and enter 2022 with strong momentum. We plan to introduce guidance for 2022 on our next earnings call.

With that, now let me turn it over to the operator.

[Operator]

[Operator Instructions] Our first question comes from Kash Rangan of Goldman Sachs. Your line is open.

[Kash Rangan, Goldman Sachs]

Hi. Thank you very much. Congratulations on a spectacular quarter here. Not only did you show solid top line, but you're able to show leverage on the bottom line here as well. All the metrics look fantastic, so congrats. My question is, as you look at '22 and beyond, it looks like when you compare your financial results to the current company with the largest revenue, you're coming up on then very quickly. And so I'm curious to get your thoughts on the competitive landscape as you especially move upmarket? What is it like, are you still seeing the wide open space that you did at the time of the IPO and before? Are you seeing at the margin some changes in the competitive landscape? And as a result of moving upmarket, I would assume that the prospects in the deal sizes that are afforded to you will start to expand pretty significantly. And so you're going to have to hire more enterprise where the enterprise class sales people? How does that motion coming along for you guys, as you look upon this tremendous option in front of you? Thank you so much.

[Roy Mann, Co-Founder & Co-CEO]

Hi, Kash. It's Roy. Thank you for the question. So, yes, we see -- as we grow, and you asked, like, if we see this as a greenfield market, so the answer is like, definitely, yes. We are now only starting to see that companies are asking for a Work OS, okay, up until now they looked at us for different solutions, but not for the core of like building their own software. That's what they understood after they asked for us.

We are starting to see that they are asking it for -- before. So I think that's a really positive momentum in the market that people are starting to understand this category. Companies are looking for it. So I think we're just like, really, in the beginning. And obviously, as we grow upmarket, we will have to scale our sales operation and invest a lot more in both marketing and sales and build that as we scale our operation and, yes, that's something we're planning on doing this year, next year. And like, it's something we're very bullish about.

[Kash Rangan, Goldman Sachs]

Wonderful. Thank you very much.

[Operator]

Thank you. Our next question comes from Ittai Kidron of Oppenheimer. Your line is open.

[Ittai Kidron, Oppenheimer]

Thanks, guys. Maybe a couple ones for me. Guys can you talk about workdocs, and My Work since you be off to a very nice start here. I think about the impact of those solutions on your net retention numbers, and then also Eliran, maybe could talk about the Israeli Shekel [indiscernible] seats acting quite aggressively. What does it do for your planning and your OpEx is moving to '22? How far ahead are you hedged? And when does -- when and how does it hit?

[Eran Zinman, Co-Founder & Co-CEO]

Yes. So hi, Ittai this is Eran. I can start with the first part of your question, then I'll hand over to Eliran. So as we mentioned in the beginning, we see amazing adoption of workdocs, more than 40,000 accounts are using it. But I think even more importantly, 50% of all docs are being used for what we define is core workflows, meaning a very important part of how companies manage their day to day. This is up to date, one of our most widely adopted features in such a short amount of time, more than 250,000 workdocs were created, since we launched and it was like a soft launch. So, looking all parameters, we see this as a huge success. It's hard to say how much this will impact net retention, because it's still early days. But judging from the adoption and the excitement, and the feedback we get from users, I'm sure it has a lot of value to our customers, and it will be reflected in their satisfaction and how they use the platform over time.

[Eliran Glazer, CFO]

Thank you, Eran. Hey, Ittai, it's Eliran. With regards to your question on the Shekel [indiscernible] obviously, this is a challenge for the entire industry in Israel, the ecosystem of the startup companies. But if you think about that from a global perspective, first of all, 50% of our expenses are indoor U.S dollars. If you think about our online marketing spend and payroll outside of Israel, so this is edged by definition. In addition to that we are doing and using an edging company in Israel to make sure that we are protecting the budget.

Obviously, this year we took the dollar rate 3.2 and now the shekel at 3.1. But we are trying to proactively edge against it. We don't see seeing a big issue due to the cost breakdown. However, this is something that we are very much focused on with regards to today's value shekel though are. On the revenue side, most of our revenue is collected in the U.S dollar and a small portion is in Euro and British pound. So we are also looking at edging strategies to make sure that we're also protecting our top line where possible.

[Ittai Kidron, Oppenheimer]

Excellent. Good stuff. Congrats guys.

[Operator]

Thank you. Our next question comes from Scott Berg of Needham. Your line is open. Please make sure your phone isn't on mute. One moment please. Our next question comes from Mark Murphy of JPMorgan. Your line is open.

[Mark Murphy, JPMorgan]

Yes, thank you very much. I will add my congrats on a very solid quarter. My first question is, I'm curious to what extent you think you're seeing uplift in demand based on a favorable linkage with being able to enable companies to adjust to hybridize workforces. In other words, having employees that will be both remote and in office, as the economy starts to reopen from the pandemic, just in terms of creating disability to better collaboration around projects and deadlines.

[Roy Mann, Co-Founder & Co-CEO]

Thank you. It's Roy. So I think that even during the beginning of the pandemic, we got a lot of reports from customers that it was seamless for them to move to work remotely. And I feel we play a big part in helping people organize, companies organize around anything, whether they are in work, or work remotely or both. So, this thing that changes all the time, I think this is the world we live in, but it's going to see -- I don't know how it is around the world. In Israel, I can tell you we go back and forth and system stay stable and you can work with it wherever you are.

[Mark Murphy, JPMorgan]

Okay. As a follow-up, I was chuckling because I saw another monday.com ad on my browser when I logged in this morning, to listen to the call. And I click every time I see one of your ads. I -- a couple times a week. I think these advertising campaigns are brilliant. And they're fantastic if you had one that did have the gorilla or Bigfoot or something like that, they're super creative. We also keep hearing that Apple's deprecation of IDFA is kind of offending that this model of performance advertising, right, because you might not be able to use cookies or some of these low privacy schemes. And so, I guess I'm curious, how have you been able to adapt and keep -- keep this retargeting going with these ads across our devices and websites? And just how have you been able to successfully navigate that and stay ahead of the curve?

[Eran Zinman, Co-Founder & Co-CEO]

Yes. Hi, Mark. This is Eran. So I can answer that question. So I think the changes that you refer to are affecting more B2C companies who rely heavily on advertising through mobile devices and tracking people across different application. We are in a different position in terms of how we advertise. First of all, obviously, a big part of our budget is going through Google AdWords and other services that are more intent based. So it's not about tracking people, but seeing people's intent and what they’re searching for. And in other platforms such as, Facebook or Instagram, we target mostly what people are interested in, and not personal information. So those changes that you refer to aren't affecting us at all in terms of our ability to target people and find relevant customers on those platforms.

[Eliran Glazer, CFO]

And maybe, Mark to add to what Eran said, we also have a DPO in the organization that is working very closely with us and we are looking at all the security issues with regards to our campaigns. We don't see much of an impact, but I would like also to take the positives of what you said earlier and said that, we continue to invest aggressively in our online campaigns and what you see. This is part of our strategy. So on board, we look at Q4, even next year, this is one of the things that you would like to double down to make sure that you and your friends and your colleagues will continue to see this amazing advertiser as we continue to invest in them.

[Mark Murphy, JPMorgan]

Great. Thank you very much.

[Operator]

Thank you. Our next question comes from Derrick Wood of Cowen and Company. Your line is open.

[Derrick Wood, Cowen and Company]

Thanks. Very impressive quarter. A couple questions on the inflection and new 50k customers. Is that driven all by expansion business? Or you starting to see more net new customers landing in that 50k range? And maybe could you comment on what geographies you're seeing in terms of incremental strike?

[Eran Zinman, Co-Founder & Co-CEO]

Yes. Hi, Derrick. This is Eran. So, I would say both. So, we see our existing customers [indiscernible] to remind us in our model is on an expand. So usually people start using monday organically and scale, and then our sales team pick up those leads and have them scale. So we definitely see a lot of benefits from that and we get more and more customers that are able to scale within our platform. But one very interesting trend that we're starting to see as we scale and as we kind of grow our brand is customers who land with higher contracts, people that want to adopt monday widely within their company and [indiscernible] to larger account. So my answer would be, both those two trends are what's affecting the growth. And like Eliran mentioned in the beginning, this is a core part of our strategy going for it and a big focus for us as a company.

[Roy Mann, Co-Founder & Co-CEO]

And maybe just to add to Eran, that we learned bigger, and we see better retention profile, or obligating [ph] parts of our KPIs and to the results that you're seeing in the press release.

[Derrick Wood, Cowen and Company]

Fantastic. And second question. Interesting to hear you see spark a new global alliance with TalkTalk [ph]. Can you just talk about how you plan to build on this relationship and generate new channel leverage? And what's the strategy with trying to call as [indiscernible]?

[Roy Mann, Co-Founder & Co-CEO]

Yes, I can pick this one. Hi. It's Roy. So we see, partners is a big part of our strategy worldwide. TalkTalk is one of them. And we work with -- we have over 100 worldwide of medium size, and we're growing into the large ones. And it's amazing, we see a lot of synergies with existing practices that they have, that we can just like, integrate into those and its super exciting.

[Derrick Wood, Cowen and Company]

Thank you very much.

[Operator]

Thank you. Our next question comes from DJ Hynes of Canaccord. Your line is open.

[DJ Hynes, Canaccord Genuity]

Hey, guys, I'll echo and congrats. Excellent results. I want to ask a little bit about the marketplace. You've announced Hootsuite and Semrush, building out apps in the marketplace. I think you've talked about launching a payment system into the marketplace at some point. Obviously, that would be huge for your partners there. Just any thoughts around timing and ability to monetize that, that the marketplaces continues to scale?

[Eran Zinman, Co-Founder & Co-CEO]

Yes, sure. This is Eran. So, yes, definitely adding the ability to monetize through our marketplace is on a roadmap going forward. We don't have exact dates, but probably beginning of next year. That's kind of the timeline. Again, we keep investing into the marketplace, adding a lot of more features. And we've seen those big partners that goes on apps. And overall, we see much more adoption within the marketplace, more apps being built, more users installing those applications. And we have a lot of features that we plan to add to that marketplace, as I mentioned it's a very steep part of how we think about monday as a platform. So we got to invest heavily into that.

[DJ Hynes, Canaccord Genuity]

Yes, very helpful. Thank you.

[Eran Zinman, Co-Founder & Co-CEO]

Sure.

[Operator]

Thank you. Our next question comes from Brent Thill of Jefferies. Your line is open.

[John Byun, Jefferies & Company.]

Hi. Thank you. This is John Byun from Brent Thill. I had two questions. On -- first on Workdays, wondering if you're seeing different use cases compared to the use of boards, whether the same users are doing -- using both boards and docs. Just if you can give more detail there? And just a quick housekeeping on the share lockup that was mentioned in press release. Wondering approximately how many shares maybe released I think from the F1? It looks like it was a fairly small amount, but it sounds like it may be more broad based. Thank you.

[Roy Mann, Co-Founder & Co-CEO]

Yes. So, hi. Its Roy. I can take the workdocs part. So, yes, we have many users that are builders like they build a workflow. And for them, it's both like they create a board and connected to a document. Sometimes you create like a whole area of work where you have both integrated. And the reason we created workdocs is because we wanted to allow people an unstructured way to start work. And we see a lot of people just start with a document, you might write some things, and then you create a board within that doc, okay, and then he takes off from there. I can tell you that many people do the exact opposite. They have a board and then they have the document column and they have a lot of documents within the board and they manage documents and from the structured way to the unstructured. So I think we really saw one of the things we're trying to achieve, which is a multiplication of abilities effect like you add, like, seriously just like one building block, but then it's multiplied by the [indiscernible]. So it's really like a -- really core and amazing addition to the Work OS.

[Eliran Glazer, CFO]

Hi. This is Eliran. Just to make sure that you were asking about the share count? Just make sure this is the question?

[John Byun, Jefferies & Company.]

No, the release of the share lockup is coming up on Friday.

[Eliran Glazer, CFO]

The release -- the rate of the share lockup. So we are going to do it this Friday, on November 12. There is going to be the release of the lockup expiration.

[John Byun, Jefferies & Company.]

Is there a rough number of share that you expect to be eligible for release? I mean from the F1, I think we're getting some questions that the numbers were fairly small, but looks like it's broad based. Thank you.

[Eliran Glazer, CFO]

We can't really tell. We -- remember, we had two gradual releases along the way, so we can't anticipate what will be the number of the release.

[John Byun, Jefferies & Company.]

Thank you.

[Operator]

Thank you. Our next question comes from Brent Bracelin of Piper Sandler. Your line is open.

[Brent Bracelin, Piper Sandler]

Thank you for taking the questions here. Impressed to see another quarter of accelerating growth here, gentlemen. But I'd be curious to hear how the freemium offering is impacting the land motion, top of funnel build? Are you starting to see any kind of conversions to paid yet? Any color on the freemium offering that [indiscernible] that was launched earlier this year would be helpful. Thanks.

[Eran Zinman, Co-Founder & Co-CEO]

Sure. Hi, this is Eran. So as you mentioned, it was a very successful run for us as a company. And we've seen, no negative impact on the conversion. But on the other hand, we see a new type of funnel of the users. I will say that, it's not yet super significant in terms of adding new paying customers because the funnel is very long. But what we do see is that with awareness of our brand, we see more people using the platform in absolute numbers, because we get a lot of free counts, individual usage. And we feel that over time this will create more exposure for our brand. Conversion rates be steady. So we see that a free funnel converting over time, but it's still hard to kind of [indiscernible] predict how much impact this will have on our bottom line with the company. So overall, it's a very successful step in changing our product, and I'm sure it's going to have a very positive effect on our brand. And over time, we might see more and more paying customers converting from that through funnel.

[Roy Mann, Co-Founder & Co-CEO]

Yes, I can also add. Its Roy. That we see the free as a base infrastructure to be more stuff because if you have that ability to give customers something that they can rely on forever, for free, you can offer other stuff that they can tie into, like forms and other things. So I think it's a base for us to jump into future products more than anything and that's why we're super excited about.

[Brent Bracelin, Piper Sandler]

Helpful color there. And, Eliran, just one quick clarification. You did generate positive free cash flow in the quarter. It's well ahead of a year ahead of schedule there, I guess. How are you thinking about balancing kind of growth here in cash flow? Do you plan to further accelerate investments? Just how you think about kind of the nice little surprise here on free deposit, I guess for this quarter, and how should we think about that going forward?

[Eliran Glazer, CFO]

Thank you, Brent. Actually expected this question. So obviously, this is a result of the fact that we had a significant increase in revenue in ARR. And just as a reminder, our business model is paying upfront percent of -- subscribers are paying up front and 30% are paying monthly. So the fact that we had an eye for growth together with a very efficient collection drove this efficiency within our cash flow. Overall, we will continue to operate in accordance with our long-term plan. We don't aim, this is not a target for us to be cash flow positive in the near future or to generate cash. Definitely we are -- we said, we're going to continue to invest aggressively as we talked related to Mark's question earlier on the marketing campaigns and hiring. So from our perspective, this is -- obviously this is great. But we would like to continue to invest aggressively and make sure that we see this efficiency going further. As a reminder, one more thing that because we generate such a huge capital efficiency of [indiscernible], if you think about every dollar that we burn since inception, is -- we're getting like $3 in terms of pay [indiscernible] definitely for us, it would be stupid not to continue to invest. So this is the direction. We're going to continue to invest aggressively on all fronts.

[Roy Mann, Co-Founder & Co-CEO]

And if I can support what Eran is saying, its Roy, then the plans we have for next year are going to challenge the revenue growth. But we can predict, but we have big plans for next year.

[Brent Bracelin, Piper Sandler]

Great to hear. Thanks for the color, guys. Thanks.

[Operator]

Thank you. Our next question comes from Arjun Bhatia of William Blair. Your line is open.

[Arjun Bhatia, William Blair]

Yes, perfect. Thank you very much and congrats on a great quarter guys. I was particularly impressed with the 50k trends. And I'm wondering, as you kind of expand your presence as brand awareness builds, and as you see more upmarket traction, whether the profile of the customers that you're attracting has changed. Obviously, customers are willing to spend more. But I'm wondering if the profile tends to be more, you're starting to see more larger enterprises come in? Or is it too early to see that mix shift in the customer profile at this point?

[Eran Zinman, Co-Founder & Co-CEO]

So yes, sure. So we are going to as we said, the core focus for our customers is the customers with 10-plus users. So we see the share of these customers are June are basically increasing over time their shelf ARR and also we lend higher. So the profile of these customers is definitely contributing to our net dollar retention rate and growth. In addition to that, we see customers with more than 50k in ARR growing as well. So the combinations -- the combination of customer of 10-plus users plus group of 10-plus [indiscernible] customers with more than 50k in ARR becoming the kind of, I would say, the bulk of our customers, and this is the customers that we are pursuing as part of our marketing and sales effort. So we expect this trend to continue up. Important to say that we don't neglect the smaller customers because they are basically what later become the bigger customer. So even if we start with we see the positive of the big customers, it's important for us to have the small one that later become the big one, if it makes sense to you Arjun.

[Arjun Bhatia, William Blair]

Yes, that's -- it's very helpful, very clear. And then I wanted to follow-up on Brent's last question there around investments. It sounds like you have big plans for 2022. And I was wondering if you could maybe just touch on the go-to-market investments that you're making right now particularly in that direct enterprise group because we did see a big step up in R&D expense this quarter. But I think the take up in sales and marketing was a little bit more modest. So I was wondering if there's any hiring trends that you would point out that maybe are not coming in yet that might come in next year.

[Eliran Glazer, CFO]

So, definitely we are going to continue to hire aggressively. So just -- we had a PR in the past, we open the sales academy in Israel where we had I think thousands of registrations and we only choose a few dozen of them just to make sure that we have the talent. It's not only sales people, its customer success and customer success managers because they drove retention and customers, big customers. So this is another place of [indiscernible]. So we have big plans to double down on hiring the customer success managers sales and this is part of our go-to-market strategy. In addition to that, we would like to continue to invest that we said on R&D, so the combination of investments in R&D as well as the sales and customer success alongside the partners, this is a, I would say, the main focus so far, within next quarter and the following years.

[Arjun Bhatia, William Blair]

Perfect, very helpful. Thank you and congrats again.

[Operator]

Thank you. Our next question comes from Scott Berg of Needham. Your line is open.

[Scott Berg, Needham & Company]

Hi, everyone. Thanks for taking my questions and apologize for the audio issue earlier. Nice quarter. I guess, I had two questions here. And one revisits, I guess, question from a moment ago around enterprise customers. But I wanted to ask the question, I guess a slightly different way is, as you just look at your lands [ph] broadly, whether it's a small customer or a large customer today, are your customers landing with a different seat count on initial sale, kind of on average than say, maybe a year-ago, right as the pandemic was really kind of run in full force.

[Eran Zinman, Co-Founder & Co-CEO]

Yes. Thank you. So this is Eran. So, Scott, I think, definitely yes, we see a trend where, as I mentioned, a big part of our enterprise strategies [indiscernible], but we also seen larger companies starting from a larger deployment within monday. So as we can increase our brand awareness and people are more aware about our solution. So we see kind of more companies started adopting monday will [indiscernible] deployment. I think it's also the fact that we prove our product and make it more enterprise ready, and other changes that we make in to our platform. So definitely, yes. But again, it's both. Both bottom up and larger accounts deploying, but that trend you mentioned, we definitely see it.

[Scott Berg, Needham & Company]

Great. And then from a -- a follow-up question is, I had heard from a consultant not that long ago on their thoughts that back to the office might actually have a positive impact for vendors in the space, mainly because they start seeing all the antiquated processes even more, once they're in-person in an office versus maybe not seeing all the other challenges when they're working at home. Do you think going back the opposite could be a trend to help adopt tools like monday today? Or its maybe that trend just been set from working from home over last year? Thank you.

[Roy Mann, Co-Founder & Co-CEO]

Hi. It's Roy. So, what we saw during like the shift from work to home is that people was struggling to organize things, and so we help push them to digitize and organize themselves. And when they come back, what we see is that and it might support, what you got is that it's easier to adopt a new tool and to change things when you are together in an office, okay. So, I think that adoption of new tools are easier when you're together and kind of like doubling down on solutions you already have is kind of -- is when people are apart [indiscernible], if it helps.

[Eran Zinman, Co-Founder & Co-CEO]

Scott, maybe just to add to Roy, if you think about what happened in the last few years in the industry, in the sector that we operate, definitely there is a secular tailwind and there is momentum with digitization. Obviously, they're more toward the cloud -- use of cloud. So this is a long-term trend that we're seeing. So the fact that either with working remotely or going back to the offices, I think these trends will continue to drive further growth in the sector in our space.

[Scott Berg, Needham & Company]

Fantastic. Thanks for taking my questions.

[Operator]

Thank you. Our next question comes from Andrew DeGasperi of Berenberg Capital. Your line is open.

[Andrew DeGasperi, Berenberg]

Thanks, Berenberg. Just two questions, if I may. The first one at Elevate, you announced the workdocs release. And I was just wondering how does that stack up, for example, with what Microsoft announced last week at Ignite with Loop? And how would you say, is this an indication that Microsoft is also trying to get into the work management space?

[Eran Zinman, Co-Founder & Co-CEO]

Yes, hi. So this is Eran. Yes, I think Microsoft is definitely looking into this market. And I think kind of the disadvantage is that the Microsoft suite is very fragmented. You have many, many tools that can do many things. I think the benefit of having one platform, one [indiscernible] where you can manage all aspects of your work is really a game changer in how user adopt a solution and how they use it. Definitely over time, we're going to see more kind of companies looking into I think those kinds of capabilities. But again, I think we're in a very different position in terms of customer adoption. And you can see just since we released workdocs, the adoption and usage on our platform has been really significant. So this really shows that the combination of the other elements of the platform, the board, the views, the dashboard, with the workdocs is the true game changer. I think the word that's just by themselves, wouldn't make this impact on our users and how people use it.

[Andrew DeGasperi, Berenberg]

Thanks. That's helpful. And then, secondly, separately on the enterprise wins this quarter. Can you maybe disclose to us how many seats, so to speak, have the biggest deals landed with? And then if any of the deals you sign an enterprise where wall to wall so to speak were exclusive?

[Roy Mann, Co-Founder & Co-CEO]

Yes, so we're seeing thousands of seats that we are lending in and spending within our existing customer base. We are approaching seven figures transactions, and hopefully this is not the target for us. This is something that you would like to pursue as well. So, we're seeing constant growth in the number of seats and in the -- we lend bigger within customers.

[Eliran Glazer, CFO]

Yes. And correct me if I'm wrong, [indiscernible] I'm not disclosing like wall to wall or how many accounts, but we definitely see those as one.

[Andrew DeGasperi, Berenberg]

Great, thank you.

[Operator]

Thank you. I'm showing no further questions at this time. Ladies and gentlemen, that does conclude today's conference. Thank you all for participating and have a great day. You may all disconnect.