Monday.com (MNDY), a provider of a work management software platform, has reported strong quarterly results showcasing its robust new product adoption and steady expansion in the enterprise customer segment. The company’s shares have risen by 20% year-to-date after a 53.9% increase in 2023. In the fourth quarter, Monday’s revenue surged by 35% to $202.5 million, exceeding expectations, while per-share earnings also surpassed consensus estimates by 33 cents. The company’s gross margin remained steady at 90%, while the operating margin of 10% easily beat outlook figures.
The total paid customer base for Monday.com grew by 21% to 225,231, with a 21% rise in customers with 10 or more users, reaching 53,688. The net retention rate for customers with 10+ users was 115%, aligning with expectations and expected to rebound later in the year. Demand for Monday’s core work management solutions remains strong, with about 70% of deals having no competition. The newer Sales CRM product is also experiencing rapid growth, with about half of its deals uncontested. The Sales CRM customer base reached 13,318 in Q4, showing a significant increase from a year ago.
The company’s new Dev product, catering to software development process management, is being adopted rapidly by customers, with the customer count reaching 1,448 in Q4, showcasing an acceleration in growth. Additionally, Monday launched its newest product, Code, in the December quarter to provide a secure serverless environment for developers to create apps more easily. Monday ended Q4 with 2,295 paid enterprise customers with annual recurring revenue over $50,000, marking a 56% increase year-over-year. The company is attracting larger organizations and has over 61% of the Fortune 500 as customers.
Monday.com recently raised prices for existing customers, expecting to add revenue of $15-20 million in 2024. Despite potential churn due to the price hike, about 80% of Monday’s customers are on annual contracts, limiting the impact. The company’s initial 2024 revenue outlook of $926-932 million aligns with analyst expectations and represents 27-28% growth. As a result, Jefferies, Goldman Sachs, and BofA have all raised their price targets and ratings for Monday, highlighting the company’s strong growth potential and market leadership in the collaborative work management software space.
KeyBanc also initiated coverage of Monday with an ‘Overweight’ rating, emphasizing the company’s position among collaboration software players and potential for future progress. The firm believes Monday is well-equipped to continue rolling out new products and enhancing its database for better performance. Monday’s track record of outperforming initial revenue guidance suggests potential for $981 million in revenue for 2024, representing a 34% growth rate. Looking ahead, a services-focused product planned for the second half of 2024 could further drive growth by catering to aspects of IT service management already utilized by many Monday customers.
