MNDY Q3 2021 Financial Results -Analyst Q/A and additional commentary not in prepared remarks
11/10/2021, 7:30 AM Central Time
Q Solid top line and leverage on the bottom line. As you look at 2022 and beyond, what are your thoughts on the comparative landscape. Are you seeing a wide open landscape, increasing opportunities and expanding the hiring of employees.
A As we grow, we see this as a greenfield market…definitely yes. Customers are now looking at MNDY to build the whole platform for them. People are seeing the possibilities of MNDY’s platform and the Co-CEO’s are very bullish.
Q Workdocs and Myworks, what are the impacts of net retention? How far ahead are you hedged re: sheckel and dollar currency, and when do the challenges begin?
A We see amazing adoption of workdocs –more than 40,000 have adopted it. To date, more than 250,000 workdocs have been created. This is a huge success. Hard to judge how this will drive net retention. Currently trying to hedge against it to protect their top line, but do not see it as a major issue.
Q To what extent are you seeing uplift on demand being able to hybridize work environments for people to work remote vs in the office?
A It’s going well and no problem.
Q Advertising campaigns are super creative. Hearing that Apple deprification is upending and you may not be able to use cookies, etc. How have you been able to adapt and successfully navigate this and stay ahead of the curve.
A The changes are more effecting b to c companies. MNDY is in a different position. In other platforms such as Facebook, this is not impacting them. Don’t see much of an impact and they continue to invest aggressively in their online campaigns.
Q Inflection and new 50K customers. Is it driven by net expansion or are these new logos?
A Both existing and new customers. They use a land and expand go to market strategy. One interesting trend they’re starting to see is customers want to adopt MNDY widely and are starting more frequently with larger lands. They land bigger and see larger net expansion after they land.
Q RE: New global alliance with TAKA
A We see partners as a big part of their strategy. They work with over 100 partners (medium size) and they’re growing into the larger ones. This is super exciting to see.
Q RE: Marketplace hoopsweet and semrush. You talked about issuing a payment platform.
A Definitely the ability to monetize via marketplace and see this taking place in 2022. Have a lot of features in which they plan to invest.
Q Workdays vs. boards and workdoc
A They have many users who are builders that create bigger integrations or boards and then it takes off from there. Some do the exact opposite and go from structured to unstructured.
RE: Release of the share lock-up this Friday, November 12. Can’t really tell what the size/number of shares that will be release will be.
Q How is freemium offering working. Please provide additional color.
A No negative impact, not yet super significant on adding paying customers, but it has created a lot of awareness and exposure for MNDY’s brand. Hard to yet project/predict how this will go in the future. See the free as base infrastructure.
Q You did initiate positive free cash flow a year earlier. Do you plan to accelerate investments in the future?
A This is a result in the significant increase in ARR, people paying up-front and some monthly. They don’t aim to be cashflow positive in the near future. They plan to continue to invest aggressively and make sure there’s efficiency going further. For every $1 they invest, they continue to see $3 in return, so they’d be crazy not to continue to do so. They have big plans for next year.
Q As brand awareness continues to grow, do more larger enterprises continue to come in or is it too early to see a trend?
A Companies with +10 employees is increasing, which is driving ARR and net expansion. These are the customers they are pursuing as part of their marketing strategy. That said, they do not neglect the small ones, because the small ones eventually become the big ones.
Q Can you touch on the go to market investments you plan to make in 2022 in light of a lower investment in s&m this qtr and more investments in R&D this quarter.
A They have big plans to aggressively hire customers success people and sales people as well as R&D next qtr and those that follow.
Q Enterprise customers, as you look at your lands broadly, are your customers landing with a similar seat count now vs. during covid.
A They see a trend where larger customers are starting with larger deployments. They continue to improve their product which drives this. It’s both bottom up and landing larger clients.
Q Back to office may have a positive impact on adoption. Do you think going back to the office will help to drive product adoption?
A What MNDY saw was people struggling to organize things. When they came back, it’s easier to adopt a new tool. Thinking about what happened in the last two years, there’s obviously a large adoption of cloud, and they expect this will drive adoption.
Q How does Workday stack up with what Microsoft announced last week with Loop and is MSFT trying to get into this market?
A Yes, I think MSFT is trying to get into this market. The benefit of having everything at one location/dashboard, I think MNDY is in a very different position and the adoption of Workdays is really taking off and their features are really a game-changer.
Q How many seats have the biggest deals landed with?
A We’re seeing thousands of seats. They’re seeing bigger lands with bigger customers.
Other remarks perhaps not included in prepared remarks:
Major customer wins include “Junz” (?) largest user of Microsoft, Ebay and a few others.
Over 950 employees, up 50% y/y.
Analysts consistently congratulated the Co-CEO’s and CFO for an amazing quarter.
I hope this is helpful information.
sjo