Monday.com is reporting before the bell on Wed Feb 23, with earnings call at 8:30am ET. I’ve found it good practice to document my expectations in advance, so I know how to quickly react to earnings. Price action is often swift, so I want to take advantage of after hours trading. Posting it here in case anyone finds it helpful or has meaningful disagreement and rationale around why my expectations may be off base. I like to track and predict the metrics that the company include in the press release as “important” numbers. For Monday this is Revenue Growth, adjusted Free Cash Flow (aFCF), non-GAAP Gross Margins (GM), Net Dollar Retention Rate for customers with more than 10 users (NDRR) and the count of Customers with over $50k in ARR (Cust>50k).
Monday is a relatively new company in the public markets, so we don’t have an extensive track record to base our expectations. Guidance was conservative going into the quarter, but I think expectations have to be continued sequential revenue growth in the 17-19% range. Customer counts with ARR > 50k have been accelerating at an amazing pace and the expectation is for that to continue. I’d like to see adjusted free cash flow remaining positive and increasing to give the market confidence in that road to profitability.
Thanks to offline suggestions, I’ve added Outlook expectations for the next quarter and next fiscal year. Given the conservative history, I’m looking for them to continue guiding just over 5% for the quarter and in the 40% range for the next fiscal year. We shouldn’t be surprise at the low guides, as they will give themselves plenty of room to beat and raise every quarter.
Monday.com Earnings Expectations:
MNDY Rev YoY SQoQ TTM YoY aFCF GM NDRR Cust>50k YoY SQoQ
F19 Q1 13.4
F19 Q2 17.0 27%
F19 Q3 21.1 24%
F19 Q4 26.6 26% 78.1
F20 Q1 31.9 138% 20% 96.6
F20 Q2 36.5 114% 14% 116.0 -15.0 88% 144
F20 Q3 42.6 102% 17% 137.6 -7.8 87% 185 28%
F20 Q4 50.1 89% 18% 161.1 106%
F21 Q1 59.0 85% 18% 188.2 95%
F21 Q2 70.6 94% 20% 222.3 92% -1.5 90% 125% 470 226%
F21 Q3 83.0 95% 18% 262.7 91% 2.9 90% 130% 613 231% 30%
**Mid-point Company Guidance:**
F21 Q4 87.5 5%
**My Expectations:**
Below <97 <17% <4 <725
Meets 97-99 17-19% 4-6 725-750
Exceeds >99 >19% >6 >750
**Outlook Expectations:**
NextQ FY
Below <102 <135
Meets 102-105 135-145
Exceeds >105 >145
* 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.
One final comment is in relation to Amplitude. I’ve seem others expressing concern on the board that a slight miss on expectations could send Monday spiraling downwards similar to what happened to Amplitude. Unless the miss is large, I don’t think the two are comparable. There is a very drastic difference in their current growth rates and even if they come in with 15-16% sequential growth, that still compounds to an annual growth rate of >75%. That still almost doubles the growth rate of Amplitude.
Keeping score, here’s how we’re doing this quarter, IMHO:
DataDog: Exceeded expectations :)
Cloudflare: Met expectations.
ZoomInfo: Met expectations.
Upstart: Exceeded expectations :)
Amplitude: Below expectations :(
[Monday.com](http://Monday.com): TBD
I hope you find this helpful and appreciate the feedback these posts have generated.
Cheers,
Daws (Long MNDY ~10%)