Business context and reporting period
monday.com Ltd. filed this Form 20-F for the fiscal year ended December 31, 2021. Although the request refers to 2021 Q4, this filing reports annual results; it does not provide a clear standalone fourth-quarter financial breakdown. The Israeli company sells subscriptions to its cloud-based Work OS platform, which accounted for nearly all revenue. Financial statements are prepared under U.S. GAAP and presented in U.S. dollars.
The company reported more than 152,000 paying customers across more than 200 countries at year-end, up 34% from more than 113,000 a year earlier. Customers with over 10 users accounted for 72% of ARR, versus 63% in 2020. Enterprise customers, defined as customers with over $50,000 in ARR, increased from 264 to 793.
Financial and operating performance
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Revenue | $308.2 million | $161.1 million |
| Revenue growth | 91% | 106% |
| Gross profit / gross margin | $269.1 million / 87% | $138.6 million / 86% |
| Operating loss | $126.1 million | $150.5 million |
| Net loss | $129.3 million | $152.2 million |
| Net cash from (used in) operating activities | $16.4 million | $(37.2) million |
| Adjusted free cash flow (non-GAAP) | $9.9 million | $(40.7) million |
Revenue rose by $147.0 million, driven by new customers and expansion among existing customers. Net Dollar Retention Rate for all customers was over 120% for the three months ended December 31, 2021, versus 105% a year earlier; for customers with over 10 users it was over 135%, versus over 115%.
At December 31, 2021, cash and cash equivalents were $886.8 million, compared with $129.8 million a year earlier. The increase primarily reflects $735.9 million of net proceeds from the June 2021 IPO and concurrent private placement. Deferred revenue was $134.4 million, up from $70.7 million. The company had no amount outstanding on its revolving credit facility and reported $80 million of unused borrowing capacity. Total liabilities were $229.8 million; the balance sheet showed no revolving-facility debt at year-end.
Share-based compensation expense was $73.5 million in 2021, versus $64.3 million in 2020. The company reported an accumulated deficit of $445.7 million. No standalone quarterly margin or cash-flow figures are provided in the filing text.
Material changes versus the prior comparable period
- Revenue grew 91%, slower than the 106% growth reported in 2020, while gross margin improved by approximately one percentage point to 87%.
- Net loss narrowed by $22.9 million and operating loss narrowed by $24.4 million. Operating expenses increased 37% to $395.3 million, with sales and marketing still the largest expense category.
- Operating cash flow moved from a $37.2 million outflow to a $16.4 million inflow. Management attributed the 2021 inflow in part to increases in deferred revenue and accrued expenses, as well as non-cash charges, including stock compensation.
- The company raised $735.9 million net in its IPO and concurrent private placement, converted its preferred shares into ordinary shares, and repaid $21.0 million on its credit facility during 2021.
- General and administrative expense was slightly lower than in 2020, in part because 2020 included a fully vested CEO option grant and share-based compensation related to employee secondary share sales. No secondary transactions occurred in 2021.
Outlook, commentary, risks and unusual items
The filing provides no specific numerical revenue or earnings guidance. Management expects continued investment in research and development, sales and marketing, international expansion, infrastructure and new products; it expects operating expenses to rise in absolute dollars and anticipates net losses for the foreseeable future. Management expects gross margin to remain relatively consistent over the long term. It expects R&D expense to increase in dollars and remain at least at a similar percentage of revenue; it anticipates sales and marketing expense may decline as a percentage of revenue over the long term.
Management said COVID-19 had no material positive or negative effect on 2021 revenue or results and reported no material subscription non-renewals. The filing also identifies subsequent-to-year-end uncertainty related to Russia’s actions in Ukraine, including possible sanctions, cyber disruption, inflation and operating risks.
- Profitability and execution: The company has a history of losses and depends on continued customer acquisition, retention, account expansion and effective management of rapid growth and spending.
- Product and operating concentration: Nearly all revenue depends on one platform. Service outages, bugs, security incidents, third-party infrastructure or integration problems could affect customers and renewals.
- Competition and international exposure: The market is rapidly changing; international operations expose the company to currency movements, regulation, data-transfer requirements and geopolitical risks. Approximately 52% of revenue in both 2021 and 2020 came from outside the United States.
- Digital Lift initiative: The company provided discounts to over 8,500 nonprofits, representing $7.2 million in annual recurring revenue at year-end. It has pledged equity to the foundation and set a limit of up to 1% of outstanding shares annually, with permitted carryover; future contributions may dilute shareholders. The company also notes potential accounting, tax and governance consequences if it is deemed to control the foundation.
- Governance and controls: A founder share held by co-founder Roy Mann carries veto rights over specified transactions and Digital Lift-related changes. Management reported effective disclosure controls, but the filing did not include management’s assessment or auditor attestation of internal control over financial reporting under the transition period for newly public companies.
- Other exposures: The company disclosed no material pending litigation and no off-balance-sheet arrangements. It has lease and other contractual commitments, including $71.8 million in minimum operating lease payments and $35.0 million in other contractual obligations as of year-end.
Important facts for investors to verify
- Review subsequent results for revenue growth, customer expansion, retention and enterprise ARR to assess whether rapid 2021 growth persisted.
- Track losses, operating expense growth and stock-based compensation; reconcile non-GAAP operating loss and adjusted free cash flow to GAAP measures.
- Assess the quality and repeatability of positive operating cash flow, including the contribution from deferred revenue and accrued liabilities.
- Confirm cash deployment, the status and terms of the revolving credit facility, and future lease, capital expenditure and Digital Lift commitments.
- Monitor internal-control reporting, cybersecurity and privacy developments, foreign-exchange exposure, and the scale and potential dilution of future Digital Lift equity contributions.