Results monday.com Image credit Pixabay/Geraltmonday.com released an impressive set of results for Q4 and fiscal 2022. The full-year revenues were $519.0 million, up 68% year over year, 71% FX adjusted. During the year, it added 34,000 net new customers, including 1,474 enterprise customers, a rise of 86%. The company now has 186,477 customers, up 23% year over year.

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

Roy Mann, monday.com founder and co-CEO, said, “Q4 capped off an amazing year, exceeding our expectations on both the top and bottom lines. We finished FY’22 with strong revenue growth, improving efficiency, and positive free cash flow for the second consecutive year. Despite macro uncertainties, we believe we are well positioned for the road ahead.”

Mann added during the analyst call, “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 continued 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.” (Source: The Motley Fool)

Another strong fourth quarter provided evidence of Mann’s confidence. Revenues rose 57% year over year to $149.9 million. The company is also heading towards profitability with a GAAP operating loss of $10.1 million compared to $31.6 million in the fourth quarter of 2021.

Eran Zinman, monday.com founder and co-CEO, commented, “We continue to see strong new customer demand for our products, adding more than 34,000 net new customers during the year. Customers are turning to monday.com to help them execute more strategically and efficiently, and we remain confident in the long-term opportunity ahead as we continue to provide solutions that are core to our customers’ use cases.”

Eliran Glazer, monday.com CFO, noted that he expects the company to become free cash flow positive in FY 23.

A strong outlook

Unlike others, Monday.com is fairly bullish about its prospects. In FY 23, it expects slightly lower growth of 33-34% with revenues of $688-$693 million. It expects a total loss of $36-32 million with an operating margin of -5%. The indication is that it does expect some slowdown during the year as it forecasts growth of 42%-44% in Q1 2023.

The basis of this outlook is the strong metrics that Monday.com is showing across the board. Retention is impressively high, with a net dollar retention of 120%. Importantly, customers spending $50,000 are showing retention of over 135%. The indication is that those customers are expanding the footprint of Monday.com across their organisation. However, the retention rate is down from 145% in Q3 2022.

Glazer indicated why that fell, saying, “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 the one hand, we see a very healthy traffic of new customers, new logos that’s actually buying monday software. On the other hand, you see the amount of expansion within existing customer base, mainly the big ones, is less than what is defined above. We believe it’s kind of uncertainty that has been driving most of this behavior.” (Source: The Motley Fool)

It is also notable that monday.com is lowering its cost to acquire customers and reducing its spending on sales and marketing. While Monday.com has pulled back slightly, its rivals pulled back faster, and it is now reaping the rewards.

Marketplace growth

Monday.com also announced a new partnership with Appfire to enhance its burgeoning marketplace. Mann noted, “We really care about the marketplace being a huge growth engine for us. We want to invest a lot in partners joining us. Appfire is a great partner to have. And our vision here is to build a very large and robust ecosystem around us. And the way we’re doing it, I think, is unique, is that we’re opening the platform up completely.” (Source: The Motley Fool)

Adding Appfire is one step, with Mann noting the intention of holding an AI Hackathon for contestants to build AI tools on top of Monday.com. It will also have a dedicated section on the marketplace for AI tools.

Enterprise Times: What does this mean?

Another set of strong results from monday.com. While everything looks rosy, is the leadership running a tightrope towards profitability? The risk is that a recession could lead the firm to fail to achieve its profitability targets in 2023. However, on the assumption that it has a strong pipeline, outlined by its Q1 outlook, there will be time for it to adjust its stance.

The market response was positive to these results, however. Shares rose 10.9% on the day to $145.58, reaching a high of $151.44 before falling back. With the marketplace providing opportunities for further growth and a platform that will soon see the launch of mondayDB, an upgrade to its platform.

Mann noted, “mondayDB will enhance the way Work OS engine run and store data to ensure that our platform is schemaless, completely flexible, and built for infinite scale, supporting 100 times larger boards.” (Source: The Motley Fool)

The ascent on Monday.com continues. If it continues this trajectory, it will soon become a billion-dollar revenue company and a profitable one. The question is, what will it then do with its profits? Will it look to acquire and grow market share further or expand to new regions?

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