Results monday.com Image credit Pixabay/Geraltmonday.com delivered another set of impressive results. Revenue grew by 75% in the second quarter to $123.7 million. Notably, the number of customers spending more than $50,000 annually with the Work OS company also grew by 147%. This indicates that more enterprises are investing in its solutions across their businesses. This growth will concern other vendors such as Smartsheet and Wrike especially.

monday.com continue to fuel future growth

Roy Mann, Founder and CEO monday.com (Image credit Linkedin)
Roy Mann, Founder and CEO monday.com

monday.com founder and co-CEO Roy Mann commented: “We continue to deliver strong top-line growth with revenue growing 75% in the second quarter. Our move upmarket continues at an astonishing rate, growing our enterprise customer base to more than 1,000 customers this quarter while maintaining our best in industry net dollar retention rates.”

However, others should also take note of the growth of its platform solutions and marketplace offerings. The company only monetised its marketplace in June this year and now has more than 1,000 customers paying for products. It also launched its first horizontal application built on the Work OS platform, monday CRM. Other products already include monday developer and monday marketer, according to Mann.

Eran Zinman, co-founder and co-CEO at Monday.com
Eran Zinman, co-founder and co-CEO at Monday.com

Eran Zinman, monday.com founder and co-CEO, commented: “As we announced last quarter, we’re evolving into a product suite offering as part of our larger strategy, and we have been impressed by early new customer demand for our products. We are committed to being best-in-class in every one of our products’ categories, and we know we can achieve that with the Work OS.”

The firm is attracting well-known brands such as Savills, which has standardised its marketing processes with monday.com. Other firms joining the platform in the quarter include Renault, Jellysmack, Safras & Cifras and BKP. Existing customer Motorola reported a 288% ROI from improving internal marketing and was the subject of a recent Forrester report.

The numbers

Eliran Glazer, monday.com CFO, commented: “We were pleased with our improving operating margins in the second quarter and are committed to improving efficiency. Our strategic focus remains in balancing healthy investment in the business with improving efficiency and profitability.”

Key figures from the SaaS business include:

  • GAAP operating loss was $46.2 million compared to a loss of $27.5 million in the second quarter of 2021
  • GAAP operating margin was negative 37% compared to negative 39% in the second quarter of 2021
  • Net cash used in operating activities was $14.1 million, with negative $19.3 million of adjusted free cash flow compared to net cash used in operating activities of $0.4 million and negative $1.5 million of adjusted free cash flow in the second quarter of 2021
  • The net dollar retention rate was over 125%
  • The net dollar retention rate for customers with more than 10 users was over 135%
  • The net dollar retention rate for customers with more than $50,000 in annual recurring revenue (“ARR”) was over 150%.

The retention figures are impressive. SaaS firms are often reluctant to disclose these, but monday.com is rightly proud of the numbers. Glazer commented: “With regards to gross retention, we look at gross retention, obviously, it’s getting better. The fact that we’re actually getting more momentum with customers with 10 plus users and enterprise accounts also improving our gross retention, we usually don’t disclose this number, but this is getting better as we continue to move upmarket.” (Sourcing SeekingAlpha.com)

Looking ahead

There was a note of cautious optimism from the leadership, with monday.com expecting Q3 revenues of between $130 million to $131 million, 57%- 58% growth. For the full year, it expects $498 million to $502 million, representing a 62% to 63% growth. The company is still making a loss, but Mann noted: “Since the company was founded, we’ve generated approximately $4 in recurring revenue for every $1 we burn.”

There is concern about the macro-economy, especially in Europe, where the company saw some “softness” at the end of Q2. That softness which Glazer confirmed has continued into July, alongside the FX impact, will have a 3% influence on results. Glazer commented: “We don’t have a crystal ball. But looking at the macro-economy and geopolitical terms, the Russia, Ukraine war, inflation and everything, we definitely monitor carefully the level of impact on our businesses and we adjust our assessments accordingly.” (Sourcing SeekingAlpha.com)

While monday.com was hesitant to call out a wider trend, it is potentially heading in that direction. This might have a bigger impact in future quarters. The big question is whether it will spread further afield.

Enterprise Times: What does it mean

If the slow down continues, are there tough times ahead for monday.com? Possibly not, it can turn off the tap for its marketing spend quite easily, and its momentum alone should help to continue growth. Even as firms shed jobs, monday.com uses its customer success teams to maintain revenues. Zinman explained: “For example, in Q2, one of our customer success managers worked with a larger consumer goods customer to maintain 100% of the monday.com licenses of remaining employees during layoff. Our efforts resulting in more than 65% jump in average monthly active paying users and high satisfaction with the platform.”

Analysts seem happy with the results. The share price jumped when they were revealed. Whilst they have settled slightly, they are still up 21.18% to $141.22 after five days. With the launch of monday CRM and other solutions, it has new opportunities to power its growth further.

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