IPOs 2021: monday.com’s Workflow Platform Targets $87.6 Market Opportunity

According to IDC, 65% of global GDP is expected to be digitized by 2022, driving over $6.8 trillion in global spending on digital transformation from 2020 to 2023. As organizations digitize their workstreams, activities that were earlier performed in physical environments, and those that were already digital, need to be continuously re-engineered to drive faster speed and higher efficiency. Israel-based monday.com (Nasdaq: MNDY), which recently went public, provides cloud-based solutions to drive this digitization.

monday.com’s Offerings

Founded in Tel Aviv in 2012 by Eran Zinman and Roy Mann, monday.com is an open platform that democratizes the power of software, allowing organizations to build and customize software applications and work management tools easily. monday.com was initially an internal development tool at Wix.com. It was set up to address challenges that the founders were facing for quickly scaling organizations. A few years later, it was spun off as a separate entity, then known as daPulse. In 2017, daPulse rebranded itself as monday.com

Its platform, referred to as a Work OS, is a new category of software that is geared to changing the way people work and businesses operate. It integrates with other systems and applications, to build a new connective layer for organizations, allowing organizations to accelerate their digital transformation, enhance agility, create a unified workspace across departments, and increase operational efficiency and productivity. It connects people to processes and systems, so that teams can excel in their work. By integrating with other systems and applications, it creates a connective layer for organizations to link departments and bridge information silos.

Its cloud-based platform is a no-code and low-code framework that has modular building blocks, such as items, columns, views, automations, integrations and widgets, that allow customers to create their own software applications and work management tools easily. Customers can adapt these building blocks to build software applications and tools that can be deployed in multiple use cases.

As of March 2021, monday.com had a portfolio of just under 128,000 customers across 200 industries in more than 190 countries. Customers were using its platform for multiple use cases including building business-critical software applications, building work management tools, and creating a unified workplace across their organization. Its customer list includes names like Universal Music Group, HubSpot, and the National Hockey League.

monday.com’s Financials

monday.com operates on a subscription-based model. It offers various tiers of subscriptions to organizations ranging from a free service with limited features for a small team to an enterprise-based plan that offers advanced analytics, dashboards, and automation capabilities. It has seen strong growth in the past few years. Revenues in 2020 grew an impressive 106% to $161.1 million from $78.1 million in 2019. Net loss was $152.2 million in 2020, compared to a net loss of $91.6 million in 2019.

For the recently reported quarter, it recorded revenues of $83 million, growing 95% over the year. Net loss was $28.85 million, compared to a net loss of $41.08 million a year ago.

monday.com went public in June this year. Prior to going public, it had raised $384.1 million in seven rounds of funding with the most recent round being held in June 2021 for $150 million. Its investors include Zoom, Salesforce Ventures, Entrée Capital, Insight Partners, HarbourVest Partners, Hamilton Lane, Vintage Investment Partners, Sapphire, Digital Horizon, and ION Crossover Partners. It raised $574 million when it listed at $155 at a valuation of $7.5 billion. Currently, it is trading at $339.36 with a market capitalization of $15.99 billion.

monday.com pegs its total addressable market at $56.1 billion in 2020, estimated to grow to $87.6 billion in 2024 at 12% CAGR It clearly has a big opportunity to address. The market also has tough competition from niche players like Asana and Smartsheet that also offer workflow integration capabilities and bigger players like Microsoft Project Online, and ServiceNow IT Business Management, that offer online project management collaboration tools.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

Photo Credit: Juan Guemez from Pixabay

This segment is a part in the series : IPOs 2021