What we think about Monday.com (MNDY)
Monday.com in Three Words: Work Management & Collaboration
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Background
Monday.com is a fast-growing enterprise software platform built to “democratize the power of software so organizations can easily build work management tools that fit their needs”. Fully customizable to suit any business vertical, the platform is currently used by over 225,000 customers across more than 200 industries and in over 200 countries and territories.
In the latest reporting quarter, the company delivered $217 million in revenue (+34% YoY), with a 114% net dollar-based retention rate amongst customers spending over $50,000 annually. The company is financially healthy, with no debt and over $1.2 billion in cash and cash equivalents.
In June 2024, research firm Hedgeye published a short report on Monday.com, expressing concerns over potential increased churn and a slowdown in growth due to the under-utilization of existing seats. Hedgeye also noted that new products have not scaled as expected relative to the size of Monday.com’s user base.
The primary purpose of Monday.com is to create efficiencies across teams and departments. As generative AI continues to advance, automating both repetitive and creative tasks, it may reduce the need for coordinated employee work, which is a core function of Monday.com. Unlike other SaaS companies that may adjust their billing metrics (e.g. API calls), Monday.com’s revenue is closely tied to the complexity of its customers’ staffing structures. It might therefore not be unreasonable to believe that Monday.com’s growth days may be behind it.
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