MNDY - My Notes / Thoughts / Opinions

Hopefully the formatting isn’t as wonky this time…

MNDY Quarter 3, 2021 (Q321)

Conference Call Highlights

We are extremely pleased with the results of the quarter, which demonstrated continued high growth at scale across all fronts.

Majority of hiring this year was to R&D and S&M teams.

Adjusted FCF was $2.9 [3% Margin]

As mentioned previously, upmarket growth is one of our top priorities. I’m pleased to report that our expansion into the enterprise space continues to gain momentum.

Net dollar retention for customers with more than 10 users improved to over 130%, and our net dollar retention rate for all customers improved to over 115%.

In Q3, we experienced a strong start to our new Monday, workdocs, launched new capabilities with My Work and introduced one of the first 2D work management apps in the Quest store at Meta recent Connect event…. These are more flexible ways to onboard and adopt our platform, adding a new customer entry point…

40,000+ customers using workdocs creating more than 300,000 workdocs…It’s amazing to see how much our customers love monday workdocs.

100% of enterprise customers use Layouts while 88% of them use more than 50 different automations.

Introduced Dynamic Workflow Builder enabling our customers to easily create, without any code, any kind of new automation or integration, no matter how complex they need it to be.

Announced Launch of My Work a place for customers and organization to centralize all items, whether it’s deals, campaigns, tasks or anything else, associated with their accounts.

Announced partnerships with Tata, Hootsuite, and Semrush.

Expand presence in Tokyo and Sao Paulo.

Big wins with Jamf, eBay, Cegedim, and Outbrain.

At this year’s Elevate, we’re able to help even more customers reimagine the way that they work, with over 52,000 registrants from over 100 countries, over three times the number of registrants from last year.

We expect to end 2021 on a very positive note and enter 2022 with strong momentum.

MY Summary / Conclusions

MNDY had an outstanding quarter, but this is just a point in an outstanding year. There is a lot going for them and I believe they are going to continue in hypergrowth. The one area that flagged to me was the $50k ARR customer numbers. They are not bad by any stretch of the imagination, but as part of my goal of to temper expectations, I believe this will be the number that probably contracts the fastest, which is where the stickiness of the product and the DBNRR will then show its true strength. What I mean by that is because Q221 had such an increase in the sequential customer adds (135 from 71 in Q121) they can grow their customers 30% a quarter for the next three quarters but Q222 will reflect 130% Y/Y growth with Q122 being 237%. I would consider this scenario to be a good thing, and sequential growth will be the part worth paying attention too rather than Y/Y growth.

TTM growth is decelerating, but at a rather slow rate, which is something that I like about MNDY.

Quarterly Revenue has increased Y/Y every quarter this year, with strong sequential percentages.

Non-GAAP operational margin remains negative but making substantial headway, especially in Q2 and Q3. I suspect we will see positive non-GAAP operational margin in 2022, but most likely 2023.

	Op Income  Op Margin
Q320	-30.9	     -72%
Q420	-24	     -47%
Q121	-24	     -40%
Q221	-10	     -14%
Q321	-9.4	     -11%

Regarding Q421 Scenarios outlined below

To Maintain Status Quo of what was done to the TTM in Q321 would require a 6.9% beat which is hard to say if that’s reasonable or not by itself. Looking at both % seq rev growth and TTM means it would still be the worst quarter going back to Q319. This will still be growing at 90% TTM but would be a drop in the Y/Y from the quarterly perspective. The conclusion I draw is that this should be easily attainable.

To Maintain Acceleration is 4.8% points higher than what I believe to be the status quo, and only 1% higher of a beat than what was offered in Q321. The sequential add of $15.3 fits right in line with the proportionality for the growth comparisons of 2020 to 2021. I believe this to be a realistic achievement that will set the top side of my expectation. This would cause the TTM to grow 2% to 93% points which is why I am putting this on the top side of my expectations.

To cut Last Quarters acceleration in ½ would be the most anti-climactic 8.8% beat I’ve seen. As far a relative strength of prior 4th quarters go this would be a weaker 4th quarter, but it is in-line with the sequential percentage for the quarter. I would consider this to be the “safe” beat. This means that what I consider to be safe is 1.9% greater than what I consider to be status quo, which gives me a high conviction going into the next earnings.

Q321 Revenue

$83.02M off a guide of $75 for a beat of 10.7% - Resulting in 94.1% Y/Y growth. That is $12.4 sequentially for an increase of 17.6% on the quarter.

TTM Revenue was $262.75 – Resulting in Y/Y growth of 91%. That is $40.43 Sequential for an increase of 18.4% on the quarter.

	Sales(TTM)  TTM%   Seq	 Seq %
Q121	  188.2	    95%	  27.0	  15%
Q221	  222.3	    92%	  34.2	  26%
Q321	  262.7	    91%	  40.4	  18%
Q421	  300.6	    87%	  37.9	 -6%  *guided value

Sequential Revenue add in 2021, for the first three quarters, has been 17.6%, 19.7%, 17.6%
MNDYs 2021 compounding sequential Add for the first three quarters has grown 65.5%. Compared to 2020’s 60.1%.

-At the guide for Q421 the revenue add would be 6%, which would give MNDY a 2021 total of 75.5%,
compared to 88.5% in 2020.

As a company, MNDY does not appear to have been hit too hard by COVID, as far as their revenue earnings are concerned. So, while 2020 numbers may be lower than they could have been I do not believe that the 2021 numbers are being “falsely” inflated due to lower prior year results. I draw that conclusion because Q220 sequential growth was the only time it did not increase, but it only decreased $0.8 from Q120 and $1.0 from Q419. Any impact on 2021 numbers is I believe to be minor.

        Raw Seq	    % seq Gr	% of Rev
Q121	8.8	       18%	    15%
Q221	11.6	       20%	    16%
Q321	12.4	       18%	    15%
Q421	4.98	       6%	     6%  *Guided Value


Ended Q221 with an overall TTM acceleration of -3.2%. This improved in Q321 to -1.9%. One note of caution I would like to add here - is by only having 7 quarters of revenue data I could find through current reports and the F-1 leads to very few datapoints. This means Q321 acceleration rate being 2.6% better than Q221 influenced the total TTM acceleration rate by 1/3. That’s a round about way to say I pay attention to It, but in MNDYS case is still developing. The current guide would mark an acceleration of -4.4% that’s a net change of -3.8% from Q321.

Q222	-3.2%
Q322	-0.6%
Q422	-4.4% *based off guide 

Customer Data

From what I could tell they only focus on reporting customers with more the $50,000 ARR. That grew sequentially 143 to 613 total. That’s 231% growth Y/Y and 30.4% sequentially. Q2 was an incredibly strong quarter for them.

	cust50karr  50k Seq 	50k % 	Seq% 
Q121	335	      71	219%	27%
Q221	470	     135	226%	40%
Q321	613	     143	231%	30%

Q421 Thoughts

It’s one thing to expect some sandbagging but this is just ridiculous. For sequential growth to be 1/3 of last quarter and a large deceleration in what has been their strongest quarter just doesn’t seem reasonable, but what is? I am going to be watching sequential customer adds or for any more customer metric data they decide to provide.

To Maintain Status Quo I am putting them at needing to come in with revenue at $94.12 that’s 87.7% Y/Y growth. Here’s what that looks like.

	Sales(TTM)	TTM%	Seq	Seq %
Q121	188.2	         95%	27.0	15%
Q221	222.3	         92%	34.2	26%
Q321	262.7	         91%	40.4	18%
Q421	306.7	         90%	44.0	9%

	Rev	Rev %	Beat	Seq    % seq
Q121	58.97	84.7%		8.8	17.6%
Q221	70.62	93.7%		11.6	19.7%
Q321	83.02	94.9%	10.7%	12.4	17.6%
Q421	94.12	87.7%	6.9%	11.1	13.4%

To Maintain Acceleration that was seen in Q321, they would have to post $98.33 in revenue for a beat of 11.7%.

	Sales(TTM)	TTM%	Seq	Seq %
Q121	188.2	         95%	27.0	15%
Q221	222.3	         92%	34.2	26%
Q321	262.7	         91%	40.4	18%
Q421	310.9	         93%	48.2	19%

	Rev	Rev %	Beat	Seq Growth	% seq
Q121	58.97	84.7%		8.8	        17.6%
Q221	70.62	93.7%		11.6	        19.7%
Q321	83.02	94.9%	10.7%	12.4	        17.6%
Q421	98.33	96.1%	11.7%	15.3	        18.4%

To cut Last Quarters acceleration in ½ would require revenue to come in at $95.74 for a beat of 8.8%.

	Sales(TTM)	TTM%	Seq	Seq %
Q121	188.2	        95%	27.0	15%
Q221	222.3	        92%	34.2	26%
Q321	262.7	        91%	40.4	18%
Q421	308.3	        91%	45.6	13%

	Rev	Rev %	Beat	Seq    % seq
Q121	58.97	84.7%		8.8	17.6%
Q221	70.62	93.7%		11.6	19.7%
Q321	83.02	94.9%	10.7%	12.4	17.6%
Q421	95.74	90.9%	8.8%	12.7	15.3%

Post Q321 Headlines

Really No meaningful news from Monday Since earnings, this down here is just noise

Positive / Negative Talley – 1 Positive / 0 Negative

Last 30 Days -% Positive: - Positive / - Negative

  1. () 11/24/21 *Cathie Wood’s ARK Invest Posts Fund Purchases For Monday
  2. () 11/23/21 *Cathie Wood’s ARK Invest Posts Fund Purchases For Monday
  3. (+) 11/11/21 Needham Maintains Buy on Monday.Com, Raises Price Target to $420 -Benzinga

Skudrun, that was a really excellent post on Monday, with a thorough and thoughtful analysis, using a wide variety of data points. Thanks from all of us on the board.