I agree that MNDY had excellent results.
Something that perhaps warrants even more of a highlight imo is the combination of three things which are very difficult to get right at the same time, and even more so when your NRR - or growth from your installed base of customers - is slowing (as Saul pointed out this was a negative of the report). The three things are revenue growth stability combined with profitability and cash flow improvements.
Datadog and Snowflake gave us a good illustration of what happens when your NRR slows markedly and your customer acquisition deteriorates at the same time. The result of those two things is that revenue growth drops a lot. Datadog’s revenue growth went from 74% yoy a year ago to 25% this last reported quarter and Snowflakes went from 84.5% to 47.6%. Both of those saw customer growth slow and NRR drop at the same time.
In contrast Monday managed to grow customers nicely while simultaneously limiting opex growth and managing working capital well, resulting in outsized cash flow and operating profit margin improvement. This was done in combination with revenue rate growth decreasing relatively less on a yoy view: from 75% to 42%, and stabilising on a qoq view: at 8.3% qoq for the last two quarters.
To eliminate any seasonality effects, here is the FCF margin of Q2 over the last 4 years:
| FCF % | Q2 |
|---|---|
| 2020 | -41% |
| 2021 | -2% |
| 2022 | -16% |
| 2023 | 26% |
→ That’s 42%pts!!! improvement in a year; 67%pts in 3.
And the massive cash flow margin improvement is not only due to improvements in working capital management (getting customers to pay you earlier and paying suppliers later), here is the operating margin:
| Op % | Q2 |
|---|---|
| 2020 | -41% |
| 2021 | -14% |
| 2022 | -12% |
| 2023 | 9% |
→ 21%pts improvement in a year; 50%pts in 3.
And here is the number of >$50k ARR customers added per quarter:
| >50k adds | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| 2019 | 14 | 23 | 30 | |
| 2020 | 29 | 39 | 41 | 79 |
| 2021 | 71 | 135 | 143 | 180 |
| 2022 | 167 | 200 | 163 | 151 |
| 2022 | 209 | 209 |
→ They added a record number of customers in both of the last two quarters, which is how they managed to keep revenue growth stable.
I personally think this is no small feat to pull off and only a handful of companies have managed that recently.
-wsm