Monday op loss guide

I was one of those Saul mentioned that got out of Monday during Apr/May, and saved myself the bigger drop in May/June. It is now above where I sold after this pop today, so kudos to those that still own it.

I exited for a few reasons (like heavy competition), but it was the massive FY guide in Q4 that was the biggest reason, with them projecting a major increase in costs as a major road bump to going positive in op and especially FCF margins (which touched positive for 2Qs).

If you recall, the reasons in Q4 were given spending more for the land grab (S&M) and an ambitious product roadmap (R&D). This translated into their guide for Op Loss of -30% for the FY, and -44% for Q1 (showing the spend was expected to be front loaded).

We are now – as we said in Q2, we now would like to invest in further grow the business, not only in 2022, but also beyond 2022. Therefore, we took advantage of the fact that we finished the year with cash flow positive much ahead of what we said even in the IPO. We have a massive opportunity ahead of us. This is the time for us to grab land, to increase our market shares. And as you saw in the script, we are coming with new products, innovation, and product road map is a big thing for us this year. So we said, let’s take advantage of the fact that we are actually well ahead of what we anticipated or where we anticipated to be and continue to invest and drive hyper growth for the foreseeable future. So this is the number one priority for us, but we do it with scale, and therefore, also mindful to the returns that we are doing and other business initiatives that we are currently pursuing.

Q1 in May reinforced my decision. They put up the lowest QoQ growth ever while this projected spend was going up, including from the Super Bowl ad (+$11M) and incr hiring (+$10M). Op margins backslid -30pp to -40%, and FCF -25pp to -15%, as warned. Meanwhile, they added +220 employees (nearly double the prior Q).

They beat their guide of op margin at -44%, doing -40% for +$3.2M beat. In turn, they guided Q2 to op margin of -30%, and raised the FY op guide +8M to -27%.

Fast forward to Q2 results today. They did +14.0% QoQ revenue growth (2nd lowest after last Q), yet op margin rebounded +28pp back to -12.4%. Not inline w/ the downward trend before Q1, but right back to it. FCF margin on the other hand worsened a bit to -15.6%, which is -13pp YoY. They are still hiring like mad, adding +205 employees, growing headcount +75% over the past year (yow!).

It feels like they had some ambitious plan (per the guide of -30% op margin just 3mo ago), and got majorly cautious (doing only -12.4%). There was some talk about hiring slowing, but they said it was according to their earlier plan for this entire FY. Analysts just shrugged it off and asked about EU weakness over and over.

So my questions are…

  1. why the enormous sandbag in op loss guidance for Q2?
  2. what happened w/ the plans for that $17-19M+ in expected spend, between guide (-35-33M) and actual (-15.4M)?
  3. why no mention of this adj in CC? or any questions on it at all?

I’m sure investors are happy to see op margin come in way way better than guided … but… why? In turn, they increased FY op guide by +27M to go from -27% to -21%, with Q3 guided to -18%. It was all attributed to Super Bowl and hiring in Q1, and then they hired nearly the same headcount in Q2 (so assume a similar $10M impact or so). As impactful as the Super Bowl ad was on spend… what were they expecting to spend even more on this Q?

But besides these questions on what the CFO is doing on op margin guides… plenty of positives this Q, including +200 new custs>50K (great growth against a hard comp) and the NRR for custs>50K at 150% (largest custs get larger, per this new KPI in Q1). NRR overall is +14pp YoY (upsell is working).

  • muji

Hi Muji,

Thanks a lot for this. Don’t want to hijack the thread but wanted to get your opinion, given your expertise.

Just leaving aside the numbers for a minute, can you lend us your thoughts on the “moat” for Monday?

I am not a tech guy, and so will go with their own description of what they do " is a Work Operating System (Work OS) that powers teams to run projects and workflows with confidence. It’s a simple, but intuitive, Work OS for teams to shape workflows, adjust to shifting needs, create transparency, connect collaboratively, and stop doing manual grunt work…“ will work great for any company because it uses a visual approach to simplify processes, a methodology that applies to almost any project. It provides intuitive and customizable dashboards that make it easy to delegate tasks, track progress, and integrate multiple tools”

And based on that, it is tough to appreciate its importance for a company’s bottom line? Sure, it sounds like it makes work lot easier and more productive. However, If times go sour, will this not be among those expenditures that companies can cut without having to think twice?

Or am I missing the big picture completely here? Because, impressively, it has added record numbers of large customers > 50k this quarter despite everything that is going on…So, obviously I am missing something!


Sorry , forgot to add the numbers…They have gone from 470 to 1160 customers >50k!!!That is a 147% growth, and remember their Q2-2021 was a great quarter, and so tough comparisons…

I am sure I am missing something regarding its moat.


Great questions, Peter003. I hope Muji will respond too, but I have some thoughts.

Just leaving aside the numbers for a minute, can you lend us your thoughts on the “moat” for Monday?

We like to follow the numbers here, and there’s less talk of “moats,” but in following the numbers we might be trying to do something similar. We are looking for signs – we want to determine if growth is durable or not. We don’t just take the top line in a vacuum, because gaudy growth rates are sometimes achieved temporarily (perhaps because of: short term tailwinds like covid, growth from a small base, selling dollars for 90 cents, etc). We seek companies that are leaders in their space, are not discount products but command a premium, have mission-critical products, and benefit from huge secular trends like the cloud.

So I think the question we should be asking is, “What are the signs that Monday’s growth is durable?”

I think they have a lot of competition that leads them to spend tons of money on selling, and I think they (and competitors like Asana) got a delayed covid tailwind, and I think we can clearly see they’ve had trouble keeping the pace of growth at a now-larger revenue base…just look how the revenue they add per quarter has leveled off in recent quarters:

6.10 (the add was 35.6% more than the previous Q)
7.40 (+21.3%)
9.00 (+21.6%)
11.60 (+28.9%)
12.40 (+6.9%)
12.50 (+0.8%)
13.00 (+4.0%)
15.20 (+16.9%)

Even with a beat next quarter, this looks like it might go negative, meaning they could add less revenue next quarter than they added this quarter. Seems obvious they are having trouble growing even at the scale they’re at. I don’t know why we would expect that to get better later.

We’ve seen this with other competitors in this space. Asana and Smartsheet had hypergrowth for a little while, but no longer. Is Monday fundamentally different? If so, why aren’t they growing faster?

I know the top line said 75% this quarter and that sounds good. But it will be more like 65% next quarter, and then more like 60% in Q4, and then next year they’ll be doing good to grow 50%.

This is for a company with 411m in TTM revenue, not 1.366b like Datadog or 1.637b like Crowdstrike. Those can grow (very profitably) at 55% or something, and I’ll be a happy camper. But for Monday, at their scale, it’s just not enough. Either they’re not enough of a leader, or the space isn’t worth leading. At least that’s the way I see it.



I totally agree with Bear, in that I also have much higher conviction in Datadog, Cloudflare and Snowflake, MongoDB, Crowdstrike and regarding durable growth. However, I just don’t feel I can put all my money in those and I see a lot of reasons to hold Monday. Specific to moat, I have an opinion that some might be able to guess given my plethora of posts about the benefits of AI/ML.

I heard more color on Mondays method for powering efficiency in company performance during the Call, “Big Brain”.
Roy Mann, Co-CEO/Founder from this Q CC transscript
Bigbrain collects over 200 million events a day, which informs each of our marketing campaigns and every interaction we have with our customers. By measuring everything, we empower employees to make efficient data driven decisions, optimizing for cash flow and maximizing efficiency.

When the moat in this space is continuous innovation(Bert Hochfeld,, the balancing act between opex and moving toward profitability is largely dependent on choosing the right projects on which to dedicate spend. This taken with the broad customer base and the amount of information they are able to feed into the use of their ML engine may just be what propels to become the ultimate leader in this Cloud Category. I appreciate managements style of communication, their humility in pointing to Big Brain as the driving force behind their data driven decision making. Due to this, I’m more confident in than I was.

I’m now with being 6% of my portfolio.




Great turn on this thread (though was hoping for more prognostications on the op margin guide!). But I’ve been mulling this a bit lately so let’s turn towards moat.

I’d say there is no real moat here on the product side. Monday stood out for its metrics, not its product. I had to laugh at all the talk of “Big Brain” on their call. This is like how Bill-com’s mgmt was annoyingly calling their “AI” on a few calls last year. It’s all just data-driven BUSINESS INTELLIGENCE, aka exactly what using a platform like Snowflake and BI tools enables. Where Monday has succeeded goes well beyond its “Big Brain” (internal analytics), it’s in their EXECUTION. Their harmonious S&M and R&D team are making what their biggest customers want, and then upselling them. This is clear in their new KPI in Q1 & Q2 that showed a > 150% NRR for enterprise custs. Asana has an enterprise focus too, and both are making big shifts towards more enterprise features like security and governance (which is where Asana wins in a head-to-head, I’d say).

Product-wise, in looking at the crowded competitive landscape, Monday’s one big lure is its simplicity. That has driven heavy non-tech use of their platform, so has a lot of interest from business operations teams, given its ease of setup and use. Mgmt stated 70% of their biz is non-technical (sales, marketing, HR) vs 30% technical (dev, project mgmt). They are certainly ambitious w/ their new WorkOS “products” (CRM, marketing, dev, project), but we’ve seen this motion from Smartsheet before (at least StockNovice and I have, who owned it before), and it’s really just a GTM shift. They have their work cut out for them to get best-of-breed in these areas (per mgmt’s goal), against a lot of direct competitors, including established “generic tracking” competitors Smartsheet, Asana, and Wrike, and new upstarts like Notion, Airtable, and Clickup (and, of course, well-established giants like Atlassian, Salesforce, Marketo, etc).

On that best-of-breed topic, I am struck by how developers seem to hate Monday and other “generic” dev tracking tools, as shown in the new release of Stack Overflow’s annual developer survey in June. Monday rated most disliked in async tools (aka dev work tracking tools), followed by direct competitors Smartsheet, Wrike, and Asana. That is in contrast to the well-established gorilla of Jira/Confluent in the middle plus upstarts ClickUp and Airtable. In contrast, Notion is at the top as “most liked”, surely because it is a simple-to-use competitor to Confluence as a wiki. But Notion is moving into task tracking and enterprise features. Monday is doing the opposite, moving from task tracking to wiki-like w/ its new Workdocs.

I think Monday will fair better on the non-technical side, given its simplicity-focus.

See the survey results here:… . PS I think this survey shows room for a better-focused dev tracking tool to disrupt Jira/Confluence, and it won’t be from any of these generic work tracking tools.

  • muji


I think we can only speculate the answers to your questions. I wonder the same thing because I have been trying to pay a lot more attention to where growth is coming from (As Bear pointed out above).

So this is only speculation because I have not seen it addressed anywhere, but you asked:
1) why the enormous sandbag in op loss guidance for Q2?

I think they realized in this uncertain environment they had to conserve cash. So maybe not a sandbag so mush as a change in priorities. But how did they pivot so fast? That leads to your second question and more speculation.

2) what happened w/ the plans for that $17-19M+ in expected spend, between guide (-35-33M) and actual (-15.4M)?

They still derive something like 78% of their revenue from customers that have ARR less than $50k (This is from the Q122 conference call). I infer from this that they spend a lot on advertising campaigns (like Super Bowl ad). So it could be they dialed back the advertising spend in this quarter and instead concentrated on bigger customer wins that are done with sales people that are already on payroll. This is the only way I can figure that they can dial back OpEx costs so rapidly. Again, this is speculation, which brings us to your final question.

3) why no mention of this adj in CC? or any questions on it at all?

I think a lot of analysts are terrible. I would have loved to have this question asked so we would not have the need to speculate.

  • Justin

Can you lend us your thoughts on the “moat” for Monday?


I’m not nearly as savvy as Muji is, but let me add my POV. Before the pandemic, approximately 0.5% of job openings mentioned either Asana, Monday, Airtable or Smartsheet in a job description. Today, the number is closer to 2.5% with no signs of slowing [0]. I won’t go into the repetitive tangent on how “the pandemic changed everything” but worklife DID change a lot, and its impossible to operate a business with a distributed workforce with one of these tools (or Microsoft Teams for that matter). To Bear’s point, the more contentious point is how sustainable will these growth rates be. But I do think that the demand for these tools is much more inelastic than some folks make them out to be; and it’s certainly not a “winner takes all” market.

So my questions are…
1) why the enormous sandbag in op loss guidance for Q2?
2) what happened w/ the plans for that $17-19M+ in expected spend, between guide (-35-33M) and actual (-15.4M)?
3) why no mention of this adj in CC? or any questions on it at all?


I too, wish analysts dug into this more during the call, but we do now the following:

(1) Hiring slowdown
In November 2021, Monday had ~270 job openings [1]; today they have 187 [2]. That’s a VERY dramatic decrease. This was addressed on the call several times, “we’re going to hire in a slower pace the adoption of salespeople”…“we are going to slow down the hiring and focus on positions that we know help us to complete the supporting functions to scale the company” (Glazer, CFO).

(2) Lower S&M spend
While this point might not be mutually exclusive than (1), we know that S&M ticked down from 79% of revenue in Q2’21 to 70% of revenue in Q2’22. Glazer mentioned, “When we continue in Q2 going forward, it’s going to be a more modest investment in performance marketing. We believe this is an important tool for us driving and generating leads…but…we are looking at the return of investment that we are doing on performance marketing.” It’s worth noting that R&D and G&A as a percentage of revenue ticked up compared to Q2 last year, making the S&M decrease seem more pronounced.

(3) Fiscal responsibility
I noticed a modest yet significant change in how management closed their prepared remarks over the past few quarters:

Q4’21: “We are committed to investing aggressively in our company. We will continue to prioritize growth, which we believe is the best interest of our shareholders, employees, and customers.”

Q1’22: “Looking ahead, we’ll continue to invest in growth with a strong focus on driving business efficiency.”

Q2’22: “Our strategic focus remains on balancing healthy investment in the business with improving efficiency and profitability. We’ll continue to measure and monitor our returns and adjust investment levels as needed.

Notice the change in priorities between “growth at all costs” versus “responsible growth”? Frankly, this is reassuring to see. The world looks very different than it did this time last year, and good to see management adjusting accordingly.

My Take
For transparency, my conviction in Monday lays somewhere in the middle. On the one hand, I never got comfortable enough with the high-allocations that some folks had earlier in the year; but on the other hand, I think some of the fears of competition were exacerbated by the deep share price decrease that influenced the narrative. That said, I’m waiting for some of my other holdings to report before I reassess my conviction. While the improved operational efficiency and raised guidance are encouraging – I do see some trees (to Saul’s analogy [3]) that definitely bother me.

The first being its linear deceleration. Using “trailing twelve months” (TTM) revenue to reduce any noise between quarters, Monday grew at an annualized rate of 74%. Sure, that seems very rosy – but only in isolation. This quarter last year, it’s TTM revenue was growing at an annualized rate of 95%. Let’s compare that to some of our other companies [4].

		TTMgrowth Q2’21		TTMgrowth Q2’22		Growth Endurance
Mongo		40%			57%			1.43
Gitlab		67%			81%			1.20
Datadog		69%			72%			1.05
ZScaler		59%			62%			1.05
Cloudflare	52%			53%			1.02
Sentinel	114%			107%			0.94
Crowdstrike	70%			62%			0.88
Monday		95%			74%			0.78
Snowflake	109%			66%			0.61

I know what some of you may be thinking – of course it’s harder to maintain a higher growth rate! It’s not fair to compare companies like that! But no matter how you slice and dice the data, the “net new ARR” that Monday is generating every quarter is pretty flat. Over the past 4 quarters, they have added $11.6M → $12.4M → $12.5M → $13.0M → $15.2M. In other words, they added 31% more ARR last quarter, than this time last year. Compare that with Cloudflare’s 56%, or another high grower (Crowdstrike’s) 50%.

The other issue is their declining sales efficiency. Their magic number trended downwards for the third consecutive quarter, going from 0.22 to 0.14 last quarter. This tells us that every incremental dollar of S&M is bringing in less and less revenue. No wonder they reduced their spend here – it would have looked even worse! I don’t want to read into this too much, because perhaps this is happening across SaaS in today’s environment, but this seems to be a notable decline.

The bar was really really low before the report, with its valuation at 9x NTM Sales, so I’m not terribly surprised to see its share price surge. I still think the risk/reward is attractive at a market cap of $6B with enviable metrics. We’ll see how much that changes over the next few weeks!


[4] Note that this might look drastically different once all companies report Q2’22