Business context and reporting period
monday.com Ltd. filed its FY2023 annual report on Form 20-F, covering the year ended December 31, 2023; it is not a standalone Q4 report. The Israeli-incorporated company sells subscriptions to its cloud-based Work OS platform and related products. Financial statements are prepared under U.S. GAAP and audited by Deloitte’s Israeli member firm, which issued unqualified opinions on the financial statements and internal control over financial reporting.
At year-end, the company reported more than 225,000 paying customers across over 200 industries and more than 200 countries and territories. No individual customer represented more than 1% of revenue; its 100 largest customers represented less than 10%.
Financial and operating performance
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $729.7 million | $519.0 million |
| Revenue growth | 41% | 68% |
| Gross profit | $649.1 million | $452.5 million |
| Gross margin | 89% | 87% |
| Operating loss | $38.6 million | $152.0 million |
| Net loss | $1.9 million | $136.9 million |
| Net cash from operating activities | $215.4 million | $27.1 million |
| Adjusted free cash flow (non-GAAP) | $204.9 million | $8.1 million |
Sales and marketing remained the largest operating expense at $438.4 million, or about 60% of revenue, down from 76% in FY2022. Research and development was $156.5 million (21% of revenue), and general and administrative expense was $92.7 million (13%). Share-based compensation was $100.2 million. Non-GAAP operating income was $61.6 million, compared with a $47.1 million non-GAAP operating loss in FY2022; this measure excludes share-based compensation.
Cash and cash equivalents were $1.116 billion at year-end, compared with $885.9 million a year earlier. Current assets were $1.173 billion and current liabilities $416.0 million. Deferred revenue was $269.5 million, including $266.3 million current. The company reported no long-term loans; operating lease liabilities totaled $61.1 million, and total liabilities were $462.1 million. Management said existing cash would cover working-capital and capital-expenditure needs for at least 12 months and the foreseeable future.
Cash provided by operations rose substantially, supported in part by $68.9 million of additional deferred revenue and other working-capital movements. Investing activities used $10.5 million; financing activities provided $25.3 million, mainly from employee option exercises and share-plan purchases. Annualized Q4 revenue run rate is defined in the filing as Q4 revenue multiplied by four, but the supplied filing text does not provide a clear Q4 revenue value.
Material changes versus the prior comparable period
- Revenue increased 41%, slower than FY2022 growth of 68%; paying customers increased from over 186,000 to over 225,000.
- Gross margin expanded by two percentage points to 89%, while operating loss narrowed by $113.4 million and net loss narrowed by $135.0 million.
- Net cash from operations increased to $215.4 million from $27.1 million. Cash rose by $230.2 million during FY2023.
- Net dollar retention weakened: for customers with more than 10 users it was 115% for the three months ended December 31, 2023, versus over 130% a year earlier; for all customers it was 110%, versus over 120%.
- Enterprise customers with more than $50,000 ARR grew 56% to 2,295; customers above $100,000 ARR grew 58% to 833.
Outlook, commentary, risks and unusual items
- Management attributed growth to new customer additions and expansion by existing customers. It said macroeconomic conditions were slowing some existing-customer expansion and anticipated net dollar retention would begin recovering in the second half of 2024.
- The company expects research and development, sales and marketing, and general and administrative expenses to increase in absolute dollars. It expects sales and marketing as a share of revenue to decline over the long term; R&D is expected to remain around its current revenue share. Management cautioned that R&D investment may weigh on near-term profitability. The filing provides no numerical revenue or earnings guidance.
- FY2023 financial income, net, was $41.9 million, up from $22.6 million, primarily reflecting higher interest income on money-market funds. This helped bring the GAAP net loss close to break-even despite an operating loss.
- Foreign-exchange exposure is significant: about 22% of FY2023 expenses were denominated in NIS, and a 5% decrease in the U.S. dollar/NIS exchange rate would have increased cost of revenue and operating expenses by approximately 1%. The company used $157.4 million notional of NIS foreign-exchange contracts at year-end; hedging reduces but does not eliminate exposure.
- The company’s main risks include dependence on a single platform for nearly all revenue, competition, retention and expansion trends, economic uncertainty, cybersecurity and service reliability, evolving privacy and AI regulation, and foreign exchange. It also flags potential operational disruption from the Israel-Hamas war; it reported no material disruption from reserve call-ups to date.
- There were no material pending legal proceedings reported. The company does not expect to pay dividends in the foreseeable future. A January 2024 headquarters lease added $4.3 million of undiscounted payments over five years, outside year-end lease-liability totals.
Important facts for investors to verify
- Track subsequent revenue growth, enterprise ARR, and whether net dollar retention recovers as management anticipated.
- Assess cash-flow quality, including the contribution of advance billings and deferred revenue, and distinguish GAAP results from non-GAAP operating income and adjusted free cash flow.
- Review the full audited statements and notes for lease commitments, foreign-exchange hedges, share-based compensation, and potential dilution.
- Monitor operating profitability excluding interest income, which materially supported FY2023’s near-break-even net result.
- Evaluate exposure to Israel-related disruption, NIS movements, cybersecurity events, privacy/AI regulation, and customer or infrastructure concentration.
- Note that the filing’s adjusted free cash flow figures for FY2021 are inconsistent: the narrative/table reports $9.9 million, while the reconciliation reports $7.3 million.