Second quarter revenue of $175.7 million grew
42% year over year
Number of customers with more than $50k ARR
grew 63% year over year
Successfully completed and released mondayDB
1.0
Launched the monday AI Assistant and introduced
expanded AI capabilities
monday.com (NASDAQ: MNDY), a work operating system (Work
OS) where organizations of any size can create the tools and
processes they need to manage every aspect of their work, today
reported financial results for its second quarter ended June 30,
2023.
Management Commentary:
“We saw healthy customer demand in the second quarter,
reflecting our commitment to rapid innovation,” said monday.com
founder and co-CEO, Roy Mann. “The official release of the first
phase of mondayDB marks a significant transformation of our
platform, providing customers with faster boards, and future
releases will provide even more speed and scalability improvements.
We also launched our AI Assistant in the quarter and are excited
about the opportunities we see ahead with AI.”
“We continue to deliver superior value to our customers as we
strengthen our product suite and introduce expanded features and
functionality to the platform,” said monday.com founder and co-CEO,
Eran Zinman. “monday Sales CRM is seeing strong momentum as we roll
it out to our existing customer base, and the response to monday
dev has been overwhelmingly positive since transitioning the
product out of beta. We remain highly confident that our
multi-product strategy will allow us to support a wider variety of
use cases for customers of all sizes.”
“We are encouraged by our second quarter results, with our
strong execution resulting in quarterly records for our free cash
flow and non-GAAP operating income,” said Eliran Glazer, monday.com
CFO. “We continue to demonstrate our ability to deliver sustainable
growth despite the challenging macroeconomic environment, and the
strength of our results through the first half of the year give us
the confidence to raise our 2023 guidance.”
Second Quarter Fiscal 2023 Financial
Highlights:
- Revenue was $175.7 million, an increase of 42% year-over-year,
or 43% on an FX-adjusted basis.
- GAAP operating loss was $12.2 million compared to a loss of
$46.2 million in the second quarter of 2022; GAAP operating margin
was negative 7% compared to negative 37% in the second quarter of
2022.
- Non-GAAP operating income was $16.6 million compared to a loss
of $15.4 million in the second quarter of 2022; non-GAAP operating
margin was 9% compared to negative 12% in the second quarter of
2022.
- GAAP net loss per basic and diluted share was $0.15 compared to
GAAP net loss per basic and diluted share of $1.01 in the second
quarter of 2022; non-GAAP net income per basic and diluted share
was $0.43 and $0.41, respectively, compared to non-GAAP net loss
per basic and diluted share of $0.33 in the second quarter of
2022.
- Net cash provided by operating activities was $47.6 million,
with $45.9 million of free cash flow, compared to net cash used in
operating activities of $14.1 million and negative $19.3 million of
free cash flow in the second quarter of 2022.
Recent Business
Highlights:
- Net dollar retention rate was over 110%.
- Net dollar retention rate for customers with more than 10 users
was over 120%.
- Net dollar retention rate for customers with more than $50,000
in annual recurring revenue (“ARR”) was over 120%.
- The number of paid customers with more than $50,000 in ARR was
1,892, up 63% from 1,160 as of June 30, 2022.
- Announced the completion and release of mondayDB 1.0, the
initial version of our new infrastructure for the Work OS platform,
to all accounts.
- Launched the monday AI Assistant and introduced new AI
capabilities, including automated task generation, formula builder,
email composition and content generation.
- Introduced the AI solution builder, allowing customers to build
personalized boards for any process through the power of an Azure
OpenAI-powered chatbot.
Financial Outlook:
For the third quarter of fiscal year 2023, monday.com currently
expects:
- Total revenue of $181 million to $183 million, representing
year-over-year growth of 32% to 34%.
- Non-GAAP operating income of $4 million to $6 million and
operating margin of 2% to 3%.
For the full year 2023, monday.com currently expects:
- Total revenue of $713 million to $717 million, representing
year-over-year growth of 37% to 38%.
- Non-GAAP operating income of $24 million to $28 million and
operating margin of 3% to 4%.
Non-GAAP Financial
Measures:
This press release and the accompanying tables contain the
following non-GAAP financial measures: revenue excluding FX
impacts, non-GAAP gross profit, non-GAAP gross margin, non-GAAP
sales and marketing expenses, non-GAAP research and development
expenses, non-GAAP general and administrative expenses, non-GAAP
operating income (loss), non-GAAP operating margin, non-GAAP net
income (loss), non-GAAP net income (loss) per share and free cash
flow. Certain of these non-GAAP financial measures exclude
share-based compensation.
monday.com believes that these non-GAAP financial measures
provide useful information to management and investors regarding
certain financial and business trends relating to monday.com’s
financial condition and results of operations. monday.com
management uses these non-GAAP measures to compare monday.com
performance to that of prior periods, for trend analysis and for
budgeting and planning purposes. monday.com believes that the use
of these non-GAAP financial measures provides an additional tool
for investors to use in evaluating ongoing operating results and
trends and in comparing monday.com financial results to the results
of other software companies, many of which present similar non-GAAP
financial measures to investors. The non-GAAP financial information
is presented for supplemental informational purposes only and
should not be considered a substitute for financial information
presented in accordance with GAAP and may be different from
similarly titled non-GAAP measures used by other companies.
Management does not consider these non-GAAP measures in
isolation or as an alternative to financial measures determined in
accordance with GAAP. The principal limitation of these non-GAAP
financial measures is that they exclude significant expenses and
income that are required by GAAP to be recorded in monday.com
financial statements. In addition, they are subject to inherent
limitations as they reflect the exercise of judgment by management
about which expenses and income are excluded or included in
determining these non-GAAP financial measures.
Reconciliation tables of the most directly comparable GAAP
financial measures to the non-GAAP financial measures used in this
press release are included with the financial tables at the end of
this release. monday.com urges investors to review these
reconciliation tables and not to rely on any single financial
measure to evaluate the monday.com business. Management is not able
to forecast GAAP net loss on a forward-looking basis without
unreasonable efforts due to the high variability and difficulty in
predicting share-based compensation expense, the amounts of which
may be significant in future periods.
Definitions of Business Key Performance
Indicators
Net Dollar Retention Rate
We calculate Net Dollar Retention Rate as of a period end by
starting with the ARR from customers as of the 12 months prior to
such period end (“Prior Period ARR”). We then calculate the ARR
from these customers as of the current period end (“Current Period
ARR”). The calculation of Current Period ARR includes any upsells,
contraction and attrition. We then divide the total Current Period
ARR by the total Prior Period ARR to arrive at the net dollar
expansion rate. For the trailing 12-month calculation, we take a
weighted average of this calculation of our quarterly Net Dollar
Retention Rate for the four quarters ending with the most recent
quarter.
Annual Recurring Revenue (“ARR”)
Is defined to mean, as of the measurement date, the annualized
value of our customer subscriptions plan assuming that any contract
that expires during the next 12 months is renewed on its existing
terms.
Forward-Looking
Statements:
This press release contains “forward-looking statements” within
the meaning of the “safe harbor” provisions of the Private
Securities Litigation Reform Act of 1995, including but not limited
to, statements regarding our financial outlook and market
positioning. These forward-looking statements are made as of the
date they were first issued and were based on current expectations,
estimates, forecasts and projections as well as the beliefs and
assumptions of management. Words such as “outlook,” “guidance,”
“expect,” “anticipate,” “should,” “believe,” “hope,” “target,”
“project,” “plan,” “goals,” “estimate,” “potential,” “predict,”
“may,” “will,” “might,” “could,” “intend,” “shall” and variations
of these terms or the negative of these terms and similar
expressions are intended to identify these forward-looking
statements. Forward-looking statements are subject to a number of
risks and uncertainties, many of which involve factors or
circumstances that are beyond monday.com control. monday.com’s
actual results could differ materially from those stated or implied
in forward-looking statements due to a number of factors, including
but not limited to our limited operating history, fluctuations in
operating results, and the fact that we derive a majority of
revenues from a single product; our history of net losses and risks
related to our ability to achieve or maintain profitability and
manage our growth or business plan effectively; foreign currency
exchange rate fluctuations; real or perceived errors, failures,
vulnerabilities or bugs or interruptions or performance problems in
the technology or infrastructure underlying our platform; our
ability to attract customers, grow our retention rates and expand
usage within organizations; risks related to our subscription-based
business model; our ability to offer high-quality customer support
and consistent sales strategies; our ability to enhance our
reputation, brand, and market awareness of our products; risks
related to international operations; difficulties in integration of
partnerships, acquisitions and alliances; risks associated with
environmental and social responsibility; our ability to attract and
retain highly skilled employees; our ability to raise additional
capital or generate cash flows necessary to grow our business; our
ability to generate new capabilities to compete in a market that is
new and rapidly changing; uncertain global economic conditions; the
ability of our Work OS to interoperate with a variety of software
applications; our dependence on third parties for web engine
searches, the maintenance of our infrastructure, the hosting of our
platform, and mobile application distribution; risks related to
security disruptions, unauthorized system access and evolving
privacy laws and regulations; the novelty of our Digital Lift
Initiative; changes in tax law and regulations; our ability to
maintain, protect or enforce our intellectual property rights or
risks related to claims that we infringe the intellectual property
rights of others; risks related to the use of AI and AI-related
products; risks related to our use of open-source software; risks
related to our founder shares that provide certain veto rights;
risks related to our status as a foreign private issuer located in
Israel; our expectation not to pay dividends for the foreseeable
future; risks related to legal and regulatory matters; and other
factors described in “Risk Factors” in our Annual Report on Form
20-F for the year ended December 31, 2022, filed with the SEC on
March 14, 2023. Further information on potential risks that could
affect actual results will be included in the subsequent filings
that monday.com makes with the Securities and Exchange Commission
from time to time.
Past performance is not necessarily indicative of future
results. The forward-looking statements included in this press
release represent monday.com’s views as of the date of this press
release. monday.com anticipates that subsequent events and
developments will cause its views to change. monday.com undertakes
no intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise. These forward-looking statements should not be relied
upon as representing monday.com’s views as of any date subsequent
to the date of this press release.
Earnings Webcast:
monday.com will hold a public webcast at 8:30 a.m. ET today to
discuss the results for its second quarter 2023 and financial
outlook. The live call may also be accessed via telephone at +1
(646) 307-1963 or +1 (800) 715-9871 (toll-free). Please reference
conference ID: 7258179.
Investor Presentation
Details:
An investor presentation providing additional information can be
found at http://ir.monday.com.
About monday.com:
The monday.com Work OS is a low code-no code platform that
democratizes the power of software so organizations can easily
build work management tools and software applications to fit their
every need. The platform intuitively connects people to processes
and systems, empowering teams to excel in every aspect of their
work while creating an environment of transparency in business.
monday.com has offices in Tel Aviv, New York, Miami, Chicago,
Denver, London, Warsaw, Sydney, Melbourne, São Paulo, and Tokyo.
Fully customizable to suit any business vertical, the platform is
currently used by over 186,000 customers across more than 200
industries and in over 200 countries and territories.
Visit us on our LinkedIn, X (formerly Twitter), Instagram,
YouTube, TikTok, and Facebook. For more information about
monday.com please visit our Press Room.
MONDAY.COM LTD
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(U.S. dollars in thousands, except
share and per share data)
Three months ended June
30,
Six months ended June
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
Revenue
$
175,679
$
123,718
$
337,935
$
232,215
Cost of revenue
19,516
16,730
36,530
31,339
Gross profit
156,163
106,988
301,405
200,876
Operating expenses:
Research and development
39,106
33,962
76,169
60,503
Sales and marketing
107,443
96,740
215,123
212,713
General and administrative
21,781
22,466
45,032
41,336
Total operating expenses
168,330
153,168
336,324
314,552
Operating loss
(12,167)
(46,180)
(34,919)
(113,676)
Financial income, net
7,612
2,452
17,495
4,445
Loss before income taxes
(4,555)
(43,728)
(17,424)
(109,231)
Income tax
(2,480)
(1,943)
(4,278)
(3,118)
Net loss
$
(7,035)
$
(45,671)
$
(21,702)
$
(112,349)
Net loss per share, basic and diluted
$
(0.15)
$
(1.01)
$
(0.45)
$
(2.50)
Weighted-average ordinary shares used in
calculating net loss per ordinary share, basic and diluted
48,209,039
45,074,912
48,061,281
45,027,168
MONDAY.COM LTD
CONDENSED CONSOLIDATED BALANCE
SHEETS
(U.S. dollars in thousands)
June 30,
December 31,
2023
2022
ASSETS
(unaudited)
(audited)
CURRENT ASSETS:
Cash and cash equivalents
$
989,377
$
885,894
Accounts receivable, net
15,136
13,226
Prepaid expenses and other current
assets
27,398
24,725
Total current assets
1,031,911
923,845
LONG-TERM ASSETS:
Property and equipment, net
36,481
34,416
Operating lease right-of-use assets
71,872
80,197
Other long-term assets
574
585
Total long-term assets
108,927
115,198
Total assets
$
1,140,838
$
1,039,043
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
10,837
$
7,335
Accrued expenses and other current
liabilities
89,741
73,706
Deferred revenue, current
246,610
198,099
Operating lease liabilities, current
18,952
19,083
Total current liabilities
366,140
298,223
LONG-TERM LIABILITIES
Operating lease liabilities,
non-current
50,396
58,638
Deferred revenue, non-current
3,046
2,442
Total long-term liabilities
53,442
61,080
Total liabilities
419,582
359,303
SHAREHOLDERS' EQUITY:
Other comprehensive loss
(2,111)
(3,210)
Share capital and additional paid-in
capital
1,327,596
1,265,477
Accumulated deficit
(604,229)
(582,527)
Total shareholders’ equity
721,256
679,740
Total liabilities and shareholders’
equity
$
1,140,838
$
1,039,043
MONDAY.COM LTD
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
(U.S. dollars in thousands)
Three months ended
Six months ended
June 30,
June 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(7,035)
$
(45,671)
$
(21,702)
$
(112,349)
Adjustments to
reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization
2,164
1,397
4,136
2,524
Share-based compensation
28,784
30,822
51,243
54,488
Changes in operating
assets and liabilities:
Accounts receivable, net
3,850
384
(1,910)
(1,001)
Prepaid expenses and other assets
6,149
(7,995)
5,987
(3,295)
Accounts payable
(220)
(6,448)
3,596
(12,624)
Accrued expenses and other liabilities,
net
(4,252)
(3,502)
(148)
1,840
Deferred revenue
18,149
16,952
49,115
43,444
Net cash provided by (used in) operating
activities
47,589
(14,061)
90,317
(26,973)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
(1,123)
(4,550)
(4,684)
(6,904)
Capitalized software development costs
(534)
(684)
(1,019)
(1,610)
Net cash used in investing activities
(1,657)
(5,234)
(5,703)
(8,514)
MONDAY.COM LTD
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS (Cont.)
(U.S. dollars in thousands)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of share options
and employee share purchase plan
5,267
3,354
10,353
4,705
Receipt (repayment) of tax advance
relating to exercises of share options and RSUs, net
2,613
1,017
8,516
(21,367)
Capital lease payments
-
(32)
-
(43)
Net cash provided by (used in) financing
activities
7,880
4,339
18,869
(16,705)
INCREASE (DECREASE) IN CASH, AND CASH
EQUIVALENTS
53,812
(14,956)
103,483
(52,192)
CASH AND CASH EQUIVALENTS - Beginning of
period
935,565
849,576
885,894
886,812
CASH AND CASH EQUIVALENTS - End of
period
$
989,377
$
834,620
$
989,377
$
834,620
MONDAY.COM LTD
Reconciliation of GAAP to Non-GAAP
Financial Information
(U.S. dollars in thousands)
Three months ended
June 30,
Six months ended
June 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
Reconciliation of
gross profit and gross margin
GAAP gross profit
$
156,163
$
106,988
$
301,405
$
200,876
Share-based compensation
1,845
2,915
3,322
5,356
Non-GAAP gross profit
$
158,008
$
109,903
$
304,727
$
206,232
GAAP gross margin
89%
86%
89%
87%
Non-GAAP gross margin
90%
89%
90%
89%
Reconciliation of
operating expenses
GAAP research and development
$
39,106
$
33,962
$
76,169
$
60,503
Share-based compensation
(11,198)
(9,999)
(19,742)
(17,387)
Non-GAAP research and
development
$
27,908
$
23,963
$
56,427
$
43,116
GAAP sales and marketing
$
107,443
$
96,740
$
215,123
$
212,713
Share-based compensation
(8,612)
(10,075)
(13,640)
(17,453)
Non-GAAP sales and marketing
$
98,831
$
86,665
$
201,483
$
195,260
GAAP general and administrative
$
21,781
$
22,466
$
45,032
$
41,336
Share-based compensation
(7,129)
(7,833)
(14,539)
(14,292)
Non-GAAP general and
administrative
$
14,652
$
14,633
$
30,493
$
27,044
Reconciliation of
operating income (loss)
GAAP operating loss
$
(12,167)
$
(46,180)
$
(34,919)
$
(113,676)
Share-based compensation
28,784
30,822
51,243
54,488
Non-GAAP operating income
(loss)
$
16,617
$
(15,358)
$
16,324
$
(59,188)
GAAP operating margin
(7%)
(37%)
(10%)
(49%)
Non-GAAP operating margin
9%
(12%)
5%
(25%)
MONDAY.COM LTD
Reconciliation of GAAP to Non-GAAP
Financial Information (Cont.)
(U.S. dollars in thousands, except
share and per share data)
Reconciliation of
net income (loss)
GAAP net loss
$
(7,035)
$
(45,671)
$
(21,702)
$
(112,349)
Share-based compensation
28,784
30,822
51,243
54,488
Tax benefit related to share-based
compensation(1)
(786)
(68)
(1,345)
(295)
Non-GAAP net income (loss)
$
20,963
$
(14,917)
$
28,196
$
(58,156)
GAAP net loss per share, basic and
diluted
$
(0.15)
$
(1.01)
$
(0.45)
$
(2.50)
Non-GAAP net income (loss) per share,
basic
$
0.43
$
(0.33)
$
0.59
$
(1.29)
Non-GAAP net income (loss) per share,
diluted
$
0.41
$
(0.33)
$
0.55
$
(1.29)
Reconciliation of
basic and diluted weighted average number of shares
outstanding
Weighted average number of ordinary
shares outstanding used in computing basic and diluted net income
(loss) per share (GAAP)
48,209,039
45,074,912
48,061,281
45,027,168
Dilution from share options and
RSUs(2)
2,949,919
-
2,932,350
-
Weighted average number of ordinary
shares outstanding used in computing basic and diluted net income
(loss) per share (Non-GAAP)
51,158,958
45,074,912
50,993,631
45,027,168
(1)
The tax benefits generated from the
exercise of the disqualifying disposition of incentive share
options were excluded in calculating non-GAAP net income (loss) and
non-GAAP net income (loss) per basic and diluted share. The Company
believes that excluding these tax benefits enables investors to see
the full effect that excluding share-based compensation expenses
had on the operating results
(2)
The effect of these dilutive shares was
not included in the GAAP calculation of diluted net loss per share
for the six and three months ended June 30, 2023, because the
effect would have been anti-dilutive.
MONDAY.COM LTD
Reconciliation of GAAP to Non-GAAP
Financial Information (Cont.)
(U.S. dollars in thousands)
The following table reconciles our
quarterly reported year-over-year revenue growth rates to the
non-GAAP measure of FX adjusted year-over-year revenue growth rates
which excludes the impact of changes in foreign currency exchange
rates. The company believes FX adjusted growth rates provide a
useful framework for assessing our business performance excluding
the effects of foreign currency exchange rate fluctuations. The
impact of foreign currency exchange rate fluctuations is determined
by calculating the current year result using foreign exchange rates
consistent with the prior year:
Three months ended
June 30,
2023
2022
(unaudited)
Revenue growth as reported
42%
75%
Impact of foreign currency
1%
2%
Revenue growth, FX adjusted
43%
77%
MONDAY.COM LTD
Reconciliation of net cash provided by
(used in) operating activities to free cash flow
(U.S. dollars in thousands)
Three months ended June
30,
Six months ended June
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
Net cash provided by (used in) operating
activities
$
47,589
$
(14,061)
$
90,317
$
(26,973)
Purchase of property and equipment
(1,123)
(4,550)
(4,684)
(6,904)
Capitalized software development costs
(534)
(684)
(1,019)
(1,610)
Free cash flow
$
45,932
$
(19,295)
$
84,614
$
(35,487)
Free cash flow margin
26%
(16%)
25%
(15%)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230814681736/en/
Investor Relations: Byron Stephen byron@monday.com
Media Relations: Leah Walters leah@monday.com
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