MNDY earnings are out

I wanted to talk about MNDY earnings and asking if I may be missing something obvious.

From some responses I see OFF TOPIC stuff. Please don’t do that. Focus on the company

It’s earnings that count, all else just noise that does not help. Thank you.

I will reiterate: I am pleased with the numbers. I did not find anything obviously wrong, and the question I should be asking now is this:

If I didn’t own this company and who cares about the price movements, will I buy this today for the future given the growth track it’s presenting to me. And the answer is YES, this a 80 to 90% grower with 90% margins with proven capacity to deliver Free Cash Flow, 25 to 30% growing 50K+ enterprise customers with only 793 customers and I am confident they can add 1000 more customers. And I realize this is going to take investment in SALES to keep bringing in 200 to 250 to 300 customers per quarter. The next 793 customers is going to take some focus and money. Let’s go, I am a buyer.

Indulge me with additional scribblings from Earnings Call that I found useful:

70% of companies using are NON-TECH, they reiterated that again as they did last Q. (so this is not Agile, Scrum, Tasks, Issues world of tech that I am used to so I need to expand my way of looking at what does it mean to have a BOARD, WORK ITEM, WORKDOC if I were in a Pharmaceutical company for example)

They see 130 business use-cases, widespread usage in Horizontals and Verticals. I like how they see those two dimensions of expansion, attack vector for more customers.

They see themselves as a collaboration software for ANY business out there. (TAM is every business)

They see 1.3 billion information workers out there and they want to enable them to work better.

FYI, their SuperBowl Ad ad started off with “Let’s Do Great Things. Wonderful Things. Let’s Work in New Ways. With Our Own Tools. Our Own Rules” Nailed it. (I didn’t care for flying people but the first 15 seconds was good stuff and I would just make that a 15 second ad)

The guidance is ‘responsible guidance’ for 2022, We as investors cheer them on to beat it and we most of the time know they will beat it but please listen to their guidance, next Q calling for 6.8% revenue growth (on the max side), more than in previous Q guidance of 6% so they tell us they are confident, we can then play with anticipation of 8 to 10% beat. (not an issue for me)

They said “we are well ahead of where we anticipated” and “let’s drive hypergrowth”. The fact that they were FCF positive in the last 2 Qs gives them confidence that now is the time to spend the money. There is a massive opportunity ahead to grow and “we are investing a lot of money to do that”. Grab more land as fast as possible (remember last Q they said for every $1 they get $3 back)

There was a question about: ‘what incumbents are you replacing?’ and the surprising answer was - 70% are deals with NO COMPETITION.

Kudos to @FallingWallenda for bringing that up in post 83345

Two Strategies: 1) displacing basic tools (email, sheets, powerpoints) with, and 2) integrate and connect, using as one place that connects all tools, break silos (so it’s not displacing but connecting, integrating).

And they are delighted and sometimes blown away by the sophisticated, complex workflows customers end up building in (this is refreshing to hear how delighted they are to support their customers in their journey to success).

SuperBowl Ad question, effectiveness? did it drive website traffic? signups?:

“WE ARE DATA NERDS, we measure everything”, it was stated on the call couple of times. (2 points for Ravenclaw nerds then). Big spike following the ad but it’s mainly brand recognition. Overall coverage for the ad was amazing.

It’s hard to measure the Brand Effectiveness that well (which makes sense to me and I am happy they mentioned that).

A great chat was when the question was asked about NRR for 10+ users went from 119 to 136. What improved that?

Answer: Less Churn, more expansion, product improvements, relentless innovation and population growth of 10+ accounts increased. Bravo

Workdocs: lots of progress, out of beta, one of the fastest building blocks, 60K existing account use it, 800K workdocs created. (I am too lazy to see the numbers for workdocs for last Q but do compare). Very meaningful part of platform: Roy kept saying phenomenal few times.

New Products: Forms and Canvas. Experimenting with pricing as stand alone products, part of WorkOS Platform. Roy mentioned: a massive go to market for us. completely stand alone products, forms and canvas. different types of customers to join the ecosystem. new approach for us.

I see they are positioning WorkOS as a platform with stand alone products, forms, canvass, Marketplace Apps (they added payment capability there for developers to get paid). Growing ecosystem of products and each product in turn going potentially after new lands. There are people who may use Canvas Whiteboard but not yet product (clever), I feel anything to promote the brand to new lands. Innovation is one of the key drivers (again bravo for this way of thinking)

Large deal activity? seven figure deals? Yes, several deals over $1M (nice)

Free accounts significant growth but it does not hurt sales funnels, they see customers from free into paying accelerating.

KPMG involvement: assisting with digital transformation, they see no-low-code as opportunity to solve problems.

And finally Sales and Marketing spent and perhaps the reason they give us a next Q Operating Income outlook to be -45M (and probably lower FCF)

“We are frontloading expenses in Q1 to drive the growth”, increase partner channel, generate leads, aggressively hiring sales people.

Worth repeating “We are front-loading expenses in Q1 to drive the growth”

Thank you, no more OFF TOPIC posts please



Thanks Baconski, great summary of my thoughts as well!

Couple of additional points I wanted to add:

  • They are releasing two new products for 2022 (WorkForm and Canvas), an analyst asked if these were included in their guidance and their answer is NO…

  • They mentioned they are going up-market in the enterprise. We have seen how this has helped companies like Snowflake and Crowdstrike in the past.

So although we can extrapoloate a 75% - 80% growth rate for 2022, based on q1 guidance, they have lots of optionality to beat this further in their Q2 and Q3 earnings releases.

On competition, further to Baconski’s post above where 70% of deals have no competition. Let’s contrast that to Crowdstrike and Sentinel where they are openly attacking each other and competing more and more on their deals. Crowdstrike’s agent can be installed in only a few days, which means it could be uninstalled just as easily. But the reality is, if companies buy a great product, why bother?