Although the company’s adjusted profit was disappointing in the first quarter, it is turning heads in its second quarter.
In response to Monday.com’s fourth-quarter financial report, the company’s shares jumped. In addition to outperforming expectations, Monday.com issued guidance that was ahead of expectations.
Monday.com’s stock was up 11% as of 10:30 a.m. ET because of this.
What’s On the Calendar
According to Monday.com’s Q4 revenue guidance, revenue was between $140 million and $142 million, well over its previous guidance. The company has become accustomed to producing results like these, of course.
Last week, Robert Simmons, an analyst at D.A. Davidson, lowered his rating to neutral. As a result, he expected the company to beat expectations by a small margin, even though he hoped for a beat.
Monday.com’s financial results may be enthused by the market because of its profitability. Several metrics are used by the company in order to define its financial performance, including adjusted performance metrics such as operating income metrics that don’t comply with generally accepted accounting principles (GAAP).
It should be noted, however, that management guided for a non-GAAP (adjusted) operating loss of up to $22 million in Q4. This was the first time the company had ever had positive non-GAAP operating income and far exceeded its guidance.
It wasn’t expected that Monday.com would outperform on the bottom line and the top line. It is for this reason that the stock price rose today.
All As Scheduled
The company generated $519 million in revenue in 2022, a 68% increase over last year. Revenue is expected to reach $693 million in 2023, representing a 34% increase. This has led to a dramatic slowdown in growth.
It is still encouraging to see 34% growth. The economy is causing many businesses to cut back on software spend, making this even more relevant.
The company had over 186,000 customers at the end of 2022, an increase of 23% over the previous year. It is relevant to note, however, that most of these customers are small businesses, as less than 1,500 spend more than $50,000 a year.
It is estimated that Monday.com’s customers who spend more than $50,000 increased by an astounding 86% in 2022. Considering those figures and the size of Monday.com’s customer base below that spending level, I’d be very optimistic right now if I were a shareholder.
When its workflow applications deliver sufficient value, it can grow with its large customer base, provided it can get them to spend more in the long run.