Monday.com eyeing acquisitions, 600 new employees, despite underwhelming 2024 outlook
Monday.com eyeing acquisitions, 600 new employees, despite underwhelming 2024 outlook
The enterprise software company beat forecasts for 2023 with $729.7 million in revenue and 41% growth, but its outlook for 2024 disappointed investors
Monday.com has become accustomed to being the darling of investors, but on Monday they were not so enthusiastic about what the Israeli software company presented with the publication of its financial results for the fourth quarter of 2023 and for the entire year.
The numbers for the last quarter were actually better than expected, with revenues of $202.6 million, a jump of 35% compared to the corresponding quarter and above the forecasts of Wall Street.
Profit margins improved so that monday.com reported an operating loss of "only" $1.1 million compared to a loss of $10.1 million in the same period in 2022.
The enterprise software company also managed to hit the revenue forecast for the year, which grew by 41% and amounted to $729.7 million, compared to expectations for $725 million.
The annual operating loss was $38.6 million compared to $152 million in 2022. Cash flow jumped nearly tenfold in 2023 to $215.4 million compared to 2022.
However, investors chose to focus on monday.com's forecast for the first quarter of 2024, which signals a slowdown in growth. In the current quarter, it expects revenues of $207-211 million, a slight increase compared to the fourth quarter, but nevertheless a growth rate of 28%-30% compared to the corresponding quarter. At the annual level, the revenues are expected to come close to a billion dollars and amount to $926-932 million. Here too, this is a slowdown in the growth rate (28%) compared to 2023.
Monday.com's management could not give a good explanation for the sharp drop in its stock following the publication of the results, except that the expectations were sky-high and that a correction was always coming following the 20% jump in its stock in the last two weeks.
"Since Investors' Day in early December, we have seen great interest in the company, accompanied by a jump in the stock, which has since increased by 30%," said sources at monday.com, which is managed by co-founders and co-CEOs Roy Mann and Eran Zinman.
Entering Monday, monday.com traded around a value of $12 billion. "We are trying to ignore the background noise. All in all, this is the 11th quarter in a row that we have beaten the forecasts. We feel that since the beginning of the year the rate of new customer acquisition is good, but there is still a general economic slowdown. There is still a lot of general uncertainty, and we have also launched new products. So we will need time to see the dynamics. In 2024, we will approach a billion dollars in revenue, and we have already reached a billion dollars in our cash balance. This means that we can also invest more in increasing the company's revenue line, and not only organically."
Monday.com plans to recruit no fewer than 600 new employees in the coming year to join its 1,750 existing employees and is planning acquisitions that will contribute to the revenue line, as well as "acquihires," i.e. acquisitions of development teams from small startups.
