Monday.com (MNDY 0.67%), a cloud-based work operating system, released its Q1 2024 earnings on May 15, 2024.
The company reported revenue of $216.9 million, outperforming management's guidance range by $5.9 million. Non-GAAP operating income was $21.5 million, exceeding the top end of the expected range by $9.5 million. Free cash flow reached $89.9 million, far surpassing the anticipated $56 million to $60 million target range. Overall, the quarter demonstrated substantial financial and operational growth for Monday.com.
| Metric | Q1 2024 | Management Guidance | Q1 2023 | % Change YoY |
|---|---|---|---|---|
| Revenue (million) | $216.9 | $207-$211 | $162.3 | 34% |
| Non-GAAP Operating Income (million) | $21.5 | $8-$12 | ($0.3) | N/A |
| Free Cash Flow (million) | $89.9 | $56-$60 | $38.7 | 132% |
Data sources: Non-GAAP results and management guidance from the company's SEC filings. YoY = Year over Year.
Business overview and focus areas
Monday.com offers a Work OS, which is a flexible work operating system with modular building blocks. The platform can be adapted for numerous applications like marketing, CRM (customer relationship management), project management, and software development. This versatility allows various industries to tailor the platform to their unique needs, fostering solid user adoption.
Recently, the company has focused on expanding its product offerings with the introduction of new items such as the Monday Sales CRM platform for automated sales management and Monday Dev, a cloud-based app development system. These products have seen rapid market acceptance, which contributed to the company's significant growth. Key success factors for Monday.com include strong product differentiation, expansive geographic reach, and a diversified customer base.
Notable achievements during Q1 2024
The two new tools are now accessible to all customers, contributing to substantial growth. The user surge included an 18% increase in customers with 10+ users and a 48% rise in customers with ARR (annual recurring revenue) over $50,000. The company also reported a 55% surge in clients with ARR above $100,000.
From a financial perspective, quarterly revenue surged by 34% year-over-year to $216.9 million. Free cash flow skyrocketed to $89.9 million from $38.7 million in Q1 2023 -- a 132% increase. Operating margins also improved, with a GAAP operating loss of $5 million narrowing from $22.8 million in the same period last year. Non-GAAP operating margin was a notable 10%, up significantly from the 0.3% negative margin in Q1 2023.
Strategic moves included updating the pricing model and introducing the aforementioned new services. These initiatives are part of an effective pricing strategy, enhancing customer value and contributing positively to the company's financial performance.
Additionally, key one-time events made an impact during the quarter. The new products underlined Monday.com's innovative approach. Despite an ongoing GAAP operating loss, the improved figures indicate a move toward enhanced profitability.
Macroeconomic headwinds, such as changes in IT spending, are factors to watch. Despite this challenge, the company achieved significant growth both in financial metrics and product adoption.
Looking ahead
Looking forward, Monday.com provided guidance for Q2 2024, forecasting revenue between $226 million and $230 million, implying 29% to 31% year-over-year growth. Non-GAAP operating income is projected to be between $17 million and $21 million.
For the full year 2024, the company expects revenue to be in the range of $942 million to $948 million, representing growth of roughly 30%. Non-GAAP operating income is anticipated to be between $77 million and $83 million, while free cash flow was targeted at approximately $242 million.
