monday.com has announced details of its Q1 2024 results. It has revealed yet another strong quarter of growth, with revenues reaching $21.6 million, up 34% year over year. It is on track to achieve revenues of $1 billion by the end of 2025.
Importantly, the Monday.com land and expand strategy is bearing fruit, with the number of customers delivering over $50k ARR rising by 48% year over year. It brings the total to 2,491 out of a total of over 225,000 customers (as of the end of 2023). These larger customers are also staying with monday.com, with net dollar retention for this set of customers standing at 114%. The average retention rate is 110%.
Those customers spending even more money is also increasing. The number of paid customers with more than $100,000 in ARR was 911, up 55% from 588 as of March 31, 2023, and net dollar retention was 113%.
The company is also accelerating its move to profitability, achieving its highest-ever free cash flow of $89.9 million. In GAAP terms, it still recorded a loss of $5 million, but that was down from $22.8 million in Q1 2023.
Roy Mann and Eran Zinman, Co-Founders and Co-CEOs, monday.com, said, “Our Q1 results mark an exceptional start to the year, with strong demand for our products across all ends of the market. We are particularly pleased with the rapid growth of monday sales CRM and monday dev, which are both now accessible to all customers and saw accelerating account additions in the quarter. As we continue to evolve the WorkOS platform, we remain focused on delivering growth at scale while driving meaningful business value for our customers.”
Can monday.com continue to drive growth across the world
While monday.com is continuing to see growth and increasing in profitability it has slowed down what it spends on sales and marketing as a proportion of revenue. In FY2020, it spent 113% of revenue on sales and marketing activities, in FY2023, that number had dropped to 57%.
The question is whether it can maintain its growth levels. However, the actual amount spent will have increased due to the overall increase in revenue over the same period. In addition, while NRR is strong, it has been falling consistently from a high in Q1 2022 of 140% (for customers with >10 users) to 114% in its latest quarter. That is a number that monday.com will want to level off.
The company did not share what its growth rate is globally. It relies on 53% of its income from North America, 27% in Europe and only 9% in APAC. LATAM and MEA contribute 6% each. Are these numbers rising, and if so, where and by how much? Eliran Glazer, CFO of Monday.com, revealed in the analyst call, “We are seeing very strong momentum in Europe and in places where we don’t have sales organizations; we operate with partners. The momentum is good and relatively stable in terms of international expansion.” Source: The Motley Fool.
What will help with growth is that Monday.com is rolling out its AI capabilities and has now made monday Sales CRM and Monday Dev available to all customers across its regions. This should help the firm grow its ecosystem with partners able to develop more applications, and it is staying abreast, or ahead of what competitors are doing with AI.
The outlook
The outlook remains strong with Q2 revenues forecast to be in the range of $226 -230 million. This represents a growth of 29-31% year over year. For the full year, the firm is aiming for $942-948 million, 29-30% growth year over year with a free cash flow of $238 million to $244 million and an increase in free cash margin of 25-26%.
If it attains this, what are its plans for spending the money? Will it offer dividends back to shareholders, will it look to acquire businesses to further grow its presence within new countries, or will it seek technology companies to extend its solutions?
Enterprise Times: What does this mean?
Another strong set of results from monday.com. The leadership seems to be balancing its growth and cash flow well. It spent its early years burning through cash as it sought rapid growth. That growth is slowing slightly now, but profitability is soaring. It seems set to carry on performing well.
The only doubt is around its NRR, which is falling. While there is an inevitability about this, it will also need to further slow it down. What monday.com has not released is its churn figure, something the leadership will keep a close eye on in every sector it operates across.
In the short term, the results impressed the market, with shares rising 19.79% over the last 5 days to 220.72, though still below its high for the year from February of $239.22.
