CLICK HERE to see the attached slide-pack with our latest data on MNDY.
Key Takeaway: Our data measuring engagement with Monday.com shows that strength continued in Q1 followed by a softer start to Q2 almost halfway through the quarter. As we have said for the past few quarters, our primary variance to street relates to 2Q billings (we are at 20% Y/Y vs. street at ~30%). Our best estimate for next week’s report is strong topline quarter, weaker topline guide, and strong flow through to profitability. For a relatively expensive stock like MNDY we think the guide risk is reason enough to stay short into EPS, though we acknowledge the squeeze risk imposed by bearish sentiment (17% of the float short).
Positives: 1) the market is bigger than we originally expected as SMB companies are using core MNDY to run their businesses rather than just for project management 2) MNDY is moving aggressively on both a technology and marketing level, and while the CRM isn’t ready for prime time, it is still a great marketing tool giving further motivation to buyers to standardize on MNDY as a digital jack of all trades to run much of their operations.
Negatives: 1) the product market is mostly flat with implementation the real product satisfaction differentiator for customer experience, 2) that revenue is decelerating with the stock still trading in the 8x revenue range (which can be considered expensive for a commodity product), 3) competitors like ClickUp chipping away at lower SMB field, and 4) instead of launching direct product in competition, Microsoft is building AI-based work management into the Office Suite which over time can make the entire work management field redundant.
For our best ideas short deep-dive on Monday.com (MNDY) from November 2022, CLICK HERE.
