Third quarter revenue of $189.2 million grew
38% year over year
Number of customers with more than $50k ARR
grew 57% year over year
Achieved record quarterly non-GAAP operating
margin and free cash flow
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 third quarter ended September
30, 2023.
Management Commentary:
“Q3 marked another strong quarter for monday.com, with continued
momentum from our multi-product strategy and robust customer
demand,” said monday.com co-founders and co-CEOs, Roy Mann and Eran
Zinman. “We are particularly pleased with our progress on mondayDB,
our new infrastructure underpinning the WorkOS platform. The
rollout of mondayDB remains ahead of schedule, and our customers
are already seeing significant speed improvements for their largest
and most complex use cases.”
“We are very pleased with our performance in Q3, with strong
top-line growth and impressive margin expansion and cash
generation,” said Eliran Glazer, monday.com CFO. “As a result, we
are increasingly confident in our ability to reach our targets in
both the short and long term, and to continue driving efficient
growth at scale.”
Third Quarter Fiscal 2023 Financial
Highlights:
- Revenue was $189.2 million, an increase of 38%
year-over-year.
- GAAP operating loss was $2.5 million compared to a loss of
$28.2 million in the third quarter of 2022; GAAP operating margin
was negative 1% compared to negative 21% in the third quarter of
2022.
- Non-GAAP operating income was $24.1 million compared to a loss
of $2.2 million in the third quarter of 2022; non-GAAP operating
margin was 13% compared to negative 2% in the third quarter of
2022.
- GAAP basic and diluted net income per share was $0.15 compared
to GAAP basic and diluted net loss per share of $0.51 in the third
quarter of 2022; non-GAAP basic and diluted net income per share
was $0.68 and $0.64, respectively, compared to non-GAAP basic and
diluted net income per share of $0.06 and $0.05, respectively, in
the third quarter of 2022.
- Net cash provided by operating activities was $66.6 million,
with $64.9 million of free cash flow, compared to net cash provided
by operating activities of $20.0 million and $14.0 million of free
cash flow in the third 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 115%.
- Net dollar retention rate for customers with more than $50,000
in annual recurring revenue (“ARR”) was over 115%.
- The number of paid customers with more than $50,000 in ARR was
2,077, up 57% from 1,323 as of September 30, 2022.
- Began the initial release of mondayDB 1.1, the second phase in
the rollout of our new infrastructure for the Work OS platform,
focused on improving speed for large dashboards.
Financial Outlook:
For the fourth quarter of fiscal year 2023, monday.com currently
expects:
- Total revenue of $196 million to $198 million, representing
year-over-year growth of 31% to 32%.
- Non-GAAP operating income of $7 million to $9 million and
operating margin of 4% to 5%.
For the full year 2023, monday.com currently expects:
- Total revenue of $723 million to $725 million, representing
year-over-year growth of 39% to 40%.
- Non-GAAP operating income of $47 million to $49 million and
operating margin of approximately 7%.
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 income (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
Retention 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 subscription plans 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, including those related to the ongoing war between Israel
and Hamas; 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 third quarter 2023 and financial
outlook. The live call may also be accessed via telephone at +1
(646) 968-2525 or
+1 (888) 596-4144 (toll-free). Please reference
conference ID: 6714642. An archived webcast can be accessed from
the News & Events section of monday.com’s Investor Relations
website following the call.
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 September
30,
Nine months ended September
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
Revenue
$
189,190
$
136,893
$
527,125
$
369,108
Cost of revenue
21,707
17,830
58,237
49,169
Gross profit
167,483
119,063
468,888
319,939
Operating expenses:
Research and development
38,433
33,984
114,602
94,487
Sales and marketing
108,360
90,970
323,483
303,683
General and administrative
23,211
22,348
68,243
63,684
Total operating expenses
170,004
147,302
506,328
461,854
Operating loss
(2,521
)
(28,239
)
(37,440
)
(141,915
)
Financial income, net
11,555
6,972
29,050
11,417
Income (loss) before income taxes
9,034
(21,267
)
(8,390
)
(130,498
)
Income tax
(1,546
)
(1,763
)
(5,824
)
(4,881
)
Net income (loss)
$
7,488
$
(23,030
)
$
(14,214
)
$
(135,379
)
Net income (loss) per share, basic
$
0.15
$
(0.51
)
$
(0.29
)
$
(3.00
)
Net income (loss) per share, diluted
0.15
(0.51
)
(0.29
)
(3.00
)
Weighted-average ordinary shares used in
calculating net income (loss) per ordinary share, basic
48,536,315
45,477,804
48,221,457
45,179,821
Weighted-average ordinary shares used in
calculating net income (loss) per ordinary share, diluted
51,461,709
45,477,804
48,221,457
45,179,821
MONDAY.COM LTD
CONDENSED CONSOLIDATED BALANCE
SHEETS
(U.S. dollars in
thousands)
September 30,
December 31,
2023
2022
ASSETS
(unaudited)
(audited)
CURRENT ASSETS:
Cash and cash equivalents
$
1,054,270
$
885,894
Accounts receivable, net
13,806
13,226
Prepaid expenses and other current
assets
27,909
24,725
Total current assets
1,095,985
923,845
LONG-TERM ASSETS:
Property and equipment, net
36,456
34,416
Operating lease right-of-use assets
67,352
80,197
Other long-term assets
615
585
Total long-term assets
104,423
115,198
Total assets
$
1,200,408
$
1,039,043
LIABILITIES AND SHAREHOLDERS'
EQUITY
CURRENT LIABILITIES:
Accounts payable
$
16,087
$
7,335
Accrued expenses and other current
liabilities
96,507
73,706
Deferred revenue, current
257,629
198,099
Operating lease liabilities, current
18,455
19,083
Total current liabilities
388,678
298,223
LONG-TERM LIABILITIES
Operating lease liabilities,
non-current
45,455
58,638
Deferred revenue, non-current
3,854
2,442
Total long-term liabilities
49,309
61,080
Total liabilities
437,987
359,303
SHAREHOLDERS' EQUITY:
Other comprehensive loss
(2,520
)
(3,210
)
Share capital and additional paid-in
capital
1,361,682
1,265,477
Accumulated deficit
(596,741
)
(582,527
)
Total shareholders’ equity
762,421
679,740
Total liabilities and shareholders’
equity
$
1,200,408
$
1,039,043
MONDAY.COM LTD
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(U.S. dollars in
thousands)
Three months ended
Nine months ended
September 30,
September 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
7,488
$
(23,030
)
$
(14,214
)
$
(135,379
)
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization
2,331
2,860
6,467
5,384
Share-based compensation
26,598
26,054
77,841
80,542
Changes in operating
assets and liabilities:
Accounts receivable, net
1,330
(4,956
)
(580
)
(5,957
)
Prepaid expenses and other assets
4,338
5,638
10,325
2,343
Accounts payable
5,154
(4,126
)
8,750
(16,750
)
Accrued expenses and other liabilities,
net
7,513
6,087
7,365
7,927
Deferred revenue
11,827
11,503
60,942
54,947
Net cash provided by (used in) operating
activities
66,579
20,030
156,896
(6,943
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment
(779
)
(5,339
)
(5,463
)
(12,243
)
Capitalized software development costs
(910
)
(732
)
(1,929
)
(2,342
)
Net cash used in investing activities
(1,689
)
(6,071
)
(7,392
)
(14,585
)
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
4,351
3,572
14,704
8,277
Receipt (repayment) of tax advance
relating to exercises of share options and RSUs, net
(4,348
)
435
4,168
(20,932
)
Capital lease payments
-
(18
)
-
(61
)
Net cash provided by (used in) financing
activities
3
3,989
18,872
(12,716
)
INCREASE (DECREASE) IN CASH, AND CASH
EQUIVALENTS
64,893
17,948
168,376
(34,244
)
CASH AND CASH EQUIVALENTS - Beginning of
period
989,377
834,620
885,894
886,812
CASH AND CASH EQUIVALENTS - End of
period
$
1,054,270
$
852,568
$
1,054,270
$
852,568
MONDAY.COM LTD
Reconciliation of GAAP to Non-GAAP
Financial Information
(U.S. dollars in thousands)
Three months ended
September 30,
Nine months ended
September 30,
2023
2022
2023
2022
(unaudited)
(unaudited)
Reconciliation of
gross profit and gross margin
GAAP gross profit
$
167,483
$
119,063
$
468,888
$
319,939
Share-based compensation
1,383
2,683
4,705
8,039
Non-GAAP gross profit
$
168,866
$
121,746
$
473,593
$
327,978
GAAP gross margin
89
%
87
%
89
%
87
%
Non-GAAP gross margin
89
%
89
%
90
%
89
%
Reconciliation of
operating expenses
GAAP research and development
$
38,433
$
33,984
$
114,602
$
94,487
Share-based compensation
(10,382
)
(7,725
)
(30,124
)
(25,112
)
Non-GAAP research and
development
$
28,051
$
26,259
$
84,478
$
69,375
GAAP sales and marketing
$
108,360
$
90,970
$
323,483
$
303,683
Share-based compensation
(6,856
)
(8,538
)
(20,496
)
(25,991
)
Non-GAAP sales and marketing
$
101,504
$
82,432
$
302,987
$
277,692
GAAP general and administrative
$
23,211
$
22,348
$
68,243
$
63,684
Share-based compensation
(7,977
)
(7,108
)
(22,516
)
(21,400
)
Non-GAAP general and
administrative
$
15,234
$
15,240
$
45,727
$
42,284
Reconciliation of
operating income (loss)
GAAP operating loss
$
(2,521
)
$
(28,239
)
$
(37,440
)
$
(141,915
)
Share-based compensation
26,598
26,054
77,841
80,542
Non-GAAP operating income
(loss)
$
24,077
$
(2,185
)
$
40,401
$
(61,373
)
GAAP operating margin
(1
%)
(21
%)
(7
%)
(38
%)
Non-GAAP operating margin
13
%
(2
%)
8
%
(17
%)
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 income (loss)
$
7,488
$
(23,030
)
$
(14,214
)
$
(135,379
)
Share-based compensation
26,598
26,054
77,841
80,542
Tax benefit related to share-based
compensation(1)
(1,075
)
(448
)
(2,420
)
(743
)
Non-GAAP net income (loss)
$
33,011
$
2,576
$
61,207
$
(55,580
)
Reconciliation of
weighted average number of shares outstanding
Weighted-average ordinary shares used in
calculating GAAP and Non-GAAP net income (loss) per ordinary share,
basic
48,536,315
45,477,804
48,221,457
45,179,821
Effect of dilutive shares(2)
2,925,394
4,832,112
2,919,075
-
Weighted-average ordinary shares used in
calculating Non-GAAP net income (loss) per ordinary share,
diluted
51,461,709
50,309,916
51,140,532
45,179,821
GAAP net income (loss) per share,
basic
$
0.15
$
(0.51
)
$
(0.29
)
$
(3.00
)
GAAP net income per share,
diluted
$
0.15
$
(0.51
)
$
(0.29
)
$
(3.00
)
Non-GAAP net income (loss) per share,
basic
$
0.68
$
0.06
$
1.27
$
(1.23
)
Non-GAAP net income per share,
diluted
$
0.64
$
0.05
$
1.20
$
(1.23
)
(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
because the effect would have been anti-dilutive, with the
exception of the three months ended September 30, 2023.
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
September 30,
2023
2022
(unaudited)
Revenue growth as reported
38%
65%
Impact of foreign currency
0%
3%
Revenue growth, FX adjusted
38%
68%
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 September
30,
Nine months ended September
30,
2023
2022
2023
2022
(unaudited)
(unaudited)
Net cash provided by (used in) operating
activities
$
66,579
$
20,030
$
156,896
$
(6,943
)
Purchase of property and equipment
(779
)
(5,339
)
(5,463
)
(12,243
)
Capitalized software development costs
(910
)
(732
)
(1,929
)
(2,342
)
Free cash flow
$
64,890
$
13,959
$
149,504
$
(21,528
)
Free cash flow margin
34
%
10
%
28
%
(6
%)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231113395273/en/
Investor Relations: Byron Stephen byron@monday.com
Media Relations: Leah Walters leah@monday.com
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