a reason for caution on Monday.com?

Inspired by catsunited, whose warning on Amplitude


went unheeded by many of us, I decided to read through Monday.com’s last earnings transcript, and I found this comment from the CEO. I would certainly not call it a red flag, but it seems like a reason for caution at a time when it feels like anything other that solid Q to Q revenue growth that surpasses management guidance by a decent margin, accompanied by a super-rosy outlook, is causing the shares to sell off pretty sharply.

CEO: And if I can support what Eliran is saying, it’s Roy, then the plans we have for next year are going to challenge the revenue growth, but we can’t predict. But we have big plans for next year.

As most here know, Monday.com will report earnings on Wednesday. Following the AMPL and LSPD debacles, I have taken my position down from 10% to around 3%.

Monday.com feels more solid to me that AMPL, and if the shares drop sharply after earnings that are just ok, or slightly misunderstood, I may very well look to add to my allocation.


Interesting. Here’s the whole quote:

Brent Bracelin – Piper Sandler – Analyst

Helpful color there. And Eliran, just one quick clarification. You did generate positive free cash flow in the quarter. It’s well ahead of a year, ahead of schedule there.

I guess, how are you thinking about balancing kind of growth here in cash flow? Do you plan to further accelerate investments? Just how should we think about kind of the nice little surprise here on free – positive free cash flow this quarter? And how should we think about that going forward?

Eliran Glazer – Chief Financial Officer

Thank you, Brent. Actually, I expected this question. So obviously, this is the result of the fact that we had a significant increase in revenue and ARR. And just as a reminder, our business model is paying upfront – 10% of the subscribers are paying upfront and 30% are paying monthly.

So the fact that we had an eye for growth, together with a very efficient collection, drove this efficiency within our cash flow. Overall, we will continue to operate in accordance with our long-term plan. We don’t aim – this is not a target for us to be cash flow positive in the near future or to generate cash. Definitely, we are, as we said, we’re going to continue to invest aggressively as we talked, if I may, relating to Mark’s question earlier on the marketing campaigns and hiring.

So from our perspective, this is – obviously, this is great, but we would like to continue to invest aggressively and make sure that we see this efficiency going further. As a reminder, one more thing that – because we generate such a huge capital efficiency of three times, if you think about every dollar that we burned since inception, it’s – we are getting like $3 in terms of ARR. Definitely, for us, it would be stupid not to continue to invest. So this is the direction.

We are going to continue to invest aggressively on all fronts.

Roy Mann – Co-Chief Executive Officer

Yes. And if I can support what Eliran is saying, it’s Roy, then the plans we have for next year are going to challenge the revenue growth, but we can’t predict. But we have big plans for next year.

I’m honestly not sure how to interpret this quote. Is this some sort of comment on the subscribers paying upfront vs monthly and how that affects revenue? Or was it simply a slip up where he meant to say the plans would challenge cash flow growth but mistakenly said revenue?


I am reading it that the will be aggressively investing into growth vs bottom line/FCF. They want to challenge the growth in 2021 meaning they want to accelerate it. They are not saying that GROWTH is challenging, THEY will challenge the growth [rate] by actively investing into ads and hiring.


To me the “challenge” part means that they will focus on growth and you can interpret this as further acceleration, since he says that they can’t predict. I don’t think those Super Bowl ads are random and their efficiencies allows them to employ 90 marketing specialists.

That being said, I do believe that there are risks (same with S) if they are not accelerating or maintaining the efficiency and experience a slow down either in this quarter or their guidance.

While I don’t see any specific headwinds for S, outside of ultra competitive market, I do see tail and headwinds for MNDY with the World going back to normal and more people interacting in person and reducing the need to invest in a 3rd party solution if they already have something in place that gets the job done.

On the other hand lack of qualified and non qualified personnel is an issue for every company, and I think that’s why the commercials are focusing on how you can unlock the potential of their platform to optimize your existing resources.

I’m long 4% MNDY.

I read it as a slip up. I mean, why would you purposely put plans in place to challenge revenue growth? Sounds like they have big plans for growth that will challenge free cash flow generation.

Unless they plan on giving away more features for free or offer extended free trials, etc. I suppose that could challenge revenue growth at the expense of userbase growth.


where he meant to say the plans would challenge cash flow growth but mistakenly said revenue?

I have to believe this was the slipup. The context doesn’t seem to make sense otherwise.


“challenge” revenue growth = “invest to maximize” revenue growth.


First off, I want to thank everyone that contributes on this board. Especially Saul
and other prominent voices that share they’re extensive knowledge and experience in this investing game.

I see the quote in question from the earnings call as saying they are trying to challenge/ride the wave on growth/revenue trend that they’re on. It’s obvious they are trying to push growth at all costs since it’s been making sense numbers wise to do so(at least this point in they’re journey). My question is, and more so in this market, is if they start to stray from profitability how do WE handle it. I do agree to push revenues but to me it seems that’s all they may care about right now, when markets are looking for a path to profits. I guess I’m more concerned about margins than revenues on this next report.

I also can’t understand if the tools they provide work more, less or equal with stay at home work compared to on premise? Covid or not, work from wherever is and will be a fundamental shift. Collaboration tools will benefit long term from this. Zoom doesn’t count with my thesis because you can’t store and build with video conferencing. Zoom probably will always have a bigger marker cap because of its wide reach but will never be absolutely crucial to business.

Thanks again to everyone.

Long MNDY/ 18%


To me the only thing that is ambiguous about the phrase “the plans we have for next year are going to challenge the revenue growth” is what those plans are. If they are going to focus more of their spending on developing new products rather than selling existing ones, that seems to me like the kind of thing that might challenge revenue growth in the short term, with the hope that it will make revenue growth more sustainable longer term. In theory this sounds good to me, but it could lead to revenues numbers over the next few quarters that are not as awe-inspiring as we (and the markets) like to see.

Cloudfare (NET) seems to be able to get away with this “trust us, things will only get better” approach, but I am not sure if Monday.com has the degree of credibility yet.


I actually see one main problem: Monday’s product is not unique and there are many similar offerings.

Be it from Asana or also very successful Notion.

Strictly speaking, it is a normal web app. The technology to build that is not particularly complex either.

Microsoft can destroy Monday (and other companies in the sector). Microsoft would only need to add similar functionality to Teams and Monday would be history.

Contrast that with Crowdstrike, Datadog, Cloudflare. These are complex products, you don’t compete with Big Tech (Microsoft).

In this market environment, a 2nd Amplitude share price disaster is possible.


“Strictly speaking, it is a normal web app. The technology to build that is not particularly complex either. Microsoft can destroy Monday (and other companies in the sector). Microsoft would only need to add similar functionality to Teams and Monday would be history.”

tl;dr: No way. Zoom did pretty well even though Microsoft just needed to add some functionality (there are many examples of tools built from the ground up on new frameworks winning)

I think you underestimate the value of nailing user experience (UX) here. Monday.com isn’t the sum of its tech stack or lines of code, it is the UX design those things create.

I have tested or used a few of these systems with teams and they offer different things to teams in different departments/domains. For example, most dev teams are using Jira still (even though most dislike it, it is purpose-built and comprehensive). Monday.com could replace the use of Jira for a lot of people with a dedicated push in to Agile project management and by adding silly little things like a short issue ID! The Monday UX is sooo much better, for example, it is real-time while Jira still requires you to refresh a page to see updates. The Monday.com gantt chat isn’t bad, but it is really a minimum implementation of the concept (you can’t add any field as a column for example), still the technology behind that too-simple interface is clearly way way better. They are just missing features. Perhaps, even though they are developers themselves, they see this as more niche than the grandiose “Work OS”, which is for everyone doing business, not just developers.

My point with all of this is that the big guys in the space, like Atlasssian and Microsoft, can’t just pivot to better UX easily. It requires foundational design choices when building the framework. I bet the folks managing the Jira roadmap throw-up in their mouths a little bit when people bring up real-time feedback. They can’t just add this stuff in to what they already have and end up with a Monday.com-killer. Tech just doesn’t work that way. You just end up with a big, slow, disjointed collection of things that is even harder to use.

I would look more to the new tools to see if one will disrupt Monday’s path forward. Click-up ads seem to be all over and spend most of their add-time explaining why they are better than Jira or Monday.com. I’ve been meaning to give it a spin… maybe I’ll put a note in Monday to try it so I don’t forget :wink: (Seriously, if anyone reading this has a need to keep a list of things to do, or just collect notes, and you aren’t trying Monday, you should!)

I think Monday.com’s strengths:

  • User experience, which drives the rest of this list…
  • Stickiness from people establishing workflows around the data they enter in to the system. E.g. HR adds an item to track new employee onboarding through IT, training, department introductions, etc. Once you have this all documented (probably in Confluence, lol), and people are following the procedure, you have a sticky tool. People reeeaaallly need to like a new tool to replace an old one in their busy lives.
  • Expansion, like we saw with Zoom. When people like to use a tool, they find a way to use it, and talk about using it. When a department leader mentions how much they like a workflow, another department will take notice, etc.

For all these reasons, expansion is the #1 thing I want to keep an eye on as an investor, even over landing. I think for UX plays this has to be the most important. Selling it doesn’t matter as much as knowing people love to use it.

P.S. while previewing this message I noticed all the links created automatically by typing “Monday.com”…kind of genius to have your name make links automatically (most rich-text systems will do this).


Well to be honest, I do have some apprehensions primarily due the highly competitive space that Monday is in and also due to the “Mission Critical” factor; the bar for which has been set very high by companies like Datadog, Zscaler, Snowflake and MongoDB in my portfolio.

However, after rethinking and rereading my own post on Monday ( which was specific to any threat from Microsoft Loop), I feel the advantages that Monday has generally holds true.


where I wrote…

“…And with the industry heading towards Increasing Automation and Decreasing Repetitive tasks, Monday provides a solution that is addressing both of those trends. Consumers are best served when they don’t have to worry about where their workloads are running; they could be running on any cloud or on-premise. The best of the breed companies that are solving that use case are poised to have hypergrowth for the foreseeable future…”

“…Note that Salesforce Ventures and Zoom made early investments in Monday and a Keybanc study found that 67% of CIOs say collaboration is their #1 budget priority. And some 95% percent of IT and engineering leaders say their organizations are prioritizing workflow automation…”

So, I think we’re overthinking this.

I am not going to worry and will continue to hold my 6% Monday position and looking forward to the earnings. If they are positive, I may actually increase my position a little more.

Just my 2 cents!


ronjonb ( https://twitter.com/ronjonbSaaS)


I was trying to resist adding to the over-analysis, but hey its a long weekend and I have time to indulge.

While there was excitement during the previous earnings report about the surprise positive free cash flow, I don’t see them delivering a repeat in the upcoming earnings, irrespective of how strong the ARR and revenue numbers are.

Here are my assumptions and extrapolations:

Revenue $88M (as per their guidance)
R&D expenses $24M (using steady run rate)
Sales and Mktg expenses $78M (big jump here = steady run rate + $6.5M for superbowl ad)

Operating income, operating cash flow, free cash flow…all three will be negative and much lower than last 2 quarters trend

Operating cash flow and free cash flow will go back to negative territory by at least $6-7M.

Capitalized software spend (product development) could be close to $1M (their higher ever) based on the CEO comments that they will be aggressively chasing growth.

Therefore, in the upcoming earnings report, I will be focused more on the revenue numbers, customer counts, size of customer contracts, ARR etc.

I think the superbowl ad was an expensive mistake and muddies the financials more than it needs to for this relatively young company.

I have a 2.5% MNDY position

Beachman (twitter.com/Iwannabeontheb2)


Hi beachman,

Here are my assumptions and extrapolations:
Revenue $88M (as per their guidance)

Whoa! I would dump MNDY from my portfolio immediately if I expected them to do $88M in revenue for the upcoming quarterly report. Are you seeing signs they might do 88M that I haven’t seen?
That would be a severe QoQ deceleration!
I am looking for at least 95M in revenue.

In any case I might as well chime into this thread too:

Here is my rationale for keeping MNDY at lower allocation in my portfolio (8% currently), versus others on the board who have it at 20%+.

Stock price, at the end of the day, is driven by supply/demand. If institutional investors are not really piling into MNDY over time, its valuation multiples will remain depressed, as they have been, since share lockup expired months ago. Relative to its peers at least. For example, the inferior ASAN has outperformed MNDY in valuation for reasons I can only assume is not only from CEO buying but the fact that it is US based, unlike MNDY.

Venture capitalists may also be selling since lockup expiry and keeping prices depressed, but we have no visibility into this as they are not required to file Form 4 (again, because MNDY is not US based).

And I believe another reason MNDY has fewer buyers for now is the perception that MNDY lacks growth durability. This is a possibly valid concern in the “longer run” versus my other positions such as DDOG or SNOW or NET or ZS. This is because MNDY faces fierce competition as time progresses (against ASAN, MSFT loop, Clickup, Notion, etc etc, there are dozens of them.), as project management tools are not difficult for new entrants to create and take market share. Meanwhile, Datadog, SNOW etc all have clear signs of outright market leadership already and the market has priced that in accordingly.

MNDY doesn’t have an apparent advantage strong enough to conquer its peers, for now, in my mind. Right now it is thriving in a temporarily greenfield landscape. Yes it is trying to distinguish itself with WorkOS and automations but ASAN is also moving to catch up and I am sure others too (https://techcrunch.com/2022/02/15/asanas-new-workflow-tools-… Today, the company announced Asana Flow, a new set of workflow tools that help move work in an automated way within and across teams.)

While MNDY can prove growth durability each quarter, we have to keep in mind, if the perception that they’ll slow growth down in the near future holds among skeptical institutions in those future quarters, no matter what they report, then its valuation might remain compressed versus its peers.

Yes, MNDY has picture perfect flawless numbers so far.
“Follow the numbers” is not everything, however. The narrative is also very important.

Institutions will believe what they want to believe and I sense they think MNDY lacks durable growth. They need to prove them wrong over time. While yes, this is a higher reward scenario if we think they will consistently outshine expectations, it also has higher opportunity cost risk and execution risk which is why I have kept my MNDY weighting at 8%.


My Q4 expectations are in line with Jonwayne’s for revenue.

I would like to see revenue of 98M in Q4 (this I a great post detailing why this is within reach https://discussion.fool.com/mndy-my-notes-thoughts-opinions-3500… )

I would also like to see:

Customer Numbers ARR > 50K reach 800 (that would be 187 new customers added in Q4) and would be YoY growth of 203% (which is less than YoY growth posted in previous 3 quarters, but would be 30% QoQ growth which is in line with previous 3 quarters).

In Q2 they guided for 74%-75% growth in FY’21; in Q3 they guided for 86%-87% growth in FY’21 – so for FY’22 I expect them to guide for over 510M for FY’22 which would be about 70% growth - this would give them room to raise throughout the year. (Monday’s MC is currently 8.51B so 510M FY’22 revenue puts them at forward PS ratio of 16.6 for a company which is in all likelihood going to grow closer to 80%-90% in FY’22)

non-GAAP Gross Profit I expect to come in at around 87M which would a gross margin of 89% (assuming that they have 98M revenue)

NRR (for customers with >10 users) I expect to be 130% or more.

Now turning to profitability . This for me is the thing I am most worried about, in the sense that I expect that the Company’s FCF might turn negative again and I think the market might use this as an excuse to punish the stock given that in Q3 Monday reported their first positive FCF. Overall I think we are likely to see that the Company might move away from profitability in Q4 because of the substantial investments they are making in R&D and S&M; I went back to listen to the Q3 call this weekend and numerous times management stated that they intend to make substantial investments in R&D and S&M going forward.

“We continue to execute against an ambitious hiring plan. For Q3, we ended the quarter with close to 950 employees globally. This represents an increase of more than 50% from a year ago, with the majority of additions coming from R&D and sales and marketing. We plan to continue to make substantial investment in these categories for the foreseeable future.”

As pointed out by management in the call, what was great about Q3 was that the pace of the revenue growth outpaced the investment growth in R&D and S&M – I fear that that may not be the case in Q4 given that it appears to me that they may have invested a lot more in S&M in Q4 leading to an outsized growth in S&M investment (super bowl ad) in Q4.

As is outlined in the knowledgebase we want our companies to invest heavily in R&D and S&M so that they can secure a large base of customers – so I see the investments as a positive thing, but how will the market view this? I don’t know.

I intend to stick to the process and hold my whole position in MNDY going into earnings – the price action has been horrible but nothing fundamental has changed with the company since Q3 - I will only sell if I see some fundamental short fall in the ER.

I would love to know if my expectations are in line with other’s.



Hi Jon and Moneyspin,

RE: Q4 revenue projections
If MNDY stays in line with past trends, then, yes, revenue of $97-98M could be expected and that would be nice to see.

Although I do not plan to dump my shares immediately if they don’t hit this number. I will look at the entire report, listen to the earnings call, analyze the broader trends and perhaps even wait for the ASAN earnings report (3/9) before I decide what to do.

RE: institutional ownership
If institutional investors are not really piling into MNDY over time…Venture capitalists may also be selling…I believe another reason MNDY has fewer buyers for now…

Jon - Can you please share the info source where you are seeing depressed institutional buying? From what I can see, institutional ownership increased by 5.12% as of 12/31/2021. Prior to that (reporting as of 9/30/2021), instutional ownership increased by 6.6%.
Source: Fidelity.com

RE: Customer growth number/trends and ARR number/trends
These are perhaps the most informative metrics to watch in the earnings report and they will give us insight into how they are competing with ASAN and how the marketshare landscape is evolving.

Moneyspin - I agree with you on the customer growth expectations, NRR expectations and cashflows breaking the upward trend and going negative (as I stated in my previous post).

There are a few other things specific to MNDY that we need to keep in mind:

Low share float and daily trading volume - This could be having larger swings on MNDY’s share price action. MNDY has 44M shares outstanding (ASAN has 186M shares outstanding). MNDY’s average daily trading volume is about 600k shares. (ASAN’s daily trading volume is 4.7M shares).
Source: barchart.com

Increased options trading volume in MNDY - This is a recent phenomenon that is affecting all share prices, however particularly so for MNDY given the low float. Options trades in MNDY have increased 23% in the past 30 days with the put to call ratio at 1.32 (ASAN’s put to call ration is 0.76)
Source barchart.com

The USD to Israeli Shekel exchange rate - The USD has been appreciating against the ISL by about 11% from pre-pandemic levels. MNDY prices their services in USD and spends locally in ILS. If the currency exchange rate is expected to come back to the norm (ILS increases against the USD) by say 2023, then their operating expenses could be incrementally higher over the next 4-6 quarters and this is being factored into discounted cash flow and expected share price analysis.
Source xe.com

I have a 2.5% MNDY position

Beachman (twitter.com/Iwannabeontheb2)


In my earlier reply in this thread this is how I felt about Monday…

“…Well to be honest, I do have some apprehensions primarily due the highly competitive space that Monday is in and also due to the “Mission Critical” factor; the bar for which has been set very high by companies like Datadog, Zscaler, Snowflake and MongoDB in my portfolio…”

I’m fine that it was a relatively small position for me ( bumped up from 6% to 7% yesterday)

The stocks that make it to the top of my portfolio needs to be “Mission Critical” and I cannot emphasize this enough.

I’ve sold out my Monday position. I’ll stick to what I understand well and to the top names in the portfolio. Monday may do very well going forward and I wish they do but it’s not for me.



ronjonb ( https://twitter.com/ronjonbSaaS)