Of the many software-as-a-service (SaaS) companies that emerged during the past decade, Monday.com managed to stand out enough to complete an anticipated IPO. The platform’s programming enables companies to customize and manage their own software solutions without needing to learn complex coding skills.
Based in Tel Aviv, Roy Mann and Eran Zinma founded Monday.com in 2012. The platform, dubbed Work OS, is where companies find all of Monday.com’s primary offerings. Businesses can use Monday.com to capture and manage data, build automations, organize workspaces, build workflows, and more. Now that their IPO worth hundreds of millions of dollars has gone through, here’s what to know about the Monday.com IPO in 2020.
TL;DR
- Monday.com is a SaaS project management firm founded in 2012 and launched in 2014 as DaPulse.
- The firm provides a business management platform enabling automations, integrations, data processing, project and workflow management, and more.
- In October of 2020, word got out that Monday.com was aiming for a traditional IPO that would bring the company’s valuation to $4 billion. The company announced they had filed Form F-1 in May 2021.
- The company’s S-1 form indicates they raised $243 million prior to the IPO. Their post-offering valuation is $6.8 billion.
- The COVID-19 pandemic boosted demand in Monday.com’s product offerings as millions of people began working remotely.
A quick Monday.com company history
Here’s a little bit about how Monday.com got off the ground as well as the path they have taken.
Roy Mann and Eran Zinman founded the company in 2012 (originally named DaPulse) to help organizations more effectively scale and grow. Mann previously served as a senior technology leader at Wix.com, and Zinman served as Conduit Mobile’s R&D Manager.
After seed funding and building the prototype for Work OS, the company onboarded their first six customers. They now have locations in Tel Aviv, New York, Sydney, London, Miami, and San Francisco.
The main products on the Monday.com platform (called Work OS) include the following: Boards, Views, Forms, Automations, Integrations, Dashboards, and Workspaces. Work OS is described as “the visual platform that manages everything.” Products are easily usable on any device thanks to Monday.com’s Android and iOS apps.
- Boards: This helps users capture data and manage their processes.
- Views: This product involves the way users are able to see their data, which they can customize to fit their needs and preferences.
- Forms: Users can create simple-to-update forms on the web.
- Automations: You can set up automatic reactions to actions or thresholds.
- Integrations: Monday.com’s Work OS can seamlessly connect with 40 other external tools including Gmail, Outlook, Jira, Salesforce, Google Drive, Dropbox, Stripe, Slack, and Zendesk.
- Dashboards: Users can create helpful dashboards summarizing progress.
- Workspaces: Users can facilitate teamwork and manage tasks; for example, different company departments might each have their own Workspace.
Pricing for customers begins at $24 per month for three users and increases based on the number of people using the platform. There is also a free version for individuals, and a discount of 18% for teams and companies that elect to pay annually instead of monthly.
In 2018, PCMag noted that the co-founders are proud of their continual improvements to the Monday.com platform. Zinman stated, “We want to keep building a tool that works for our users rather than our users having to work for it.”
Currently, Monday.com has more than 110,000 customers and 700 employees. They report that 84% of users feel happier using the platform. As a B2B brand, Monday.com has expanded to include a blog of business stories and tips. They also produce a podcast called “Startup for Startup,” which details some of the struggles that fledgling companies go through.
Monday.com was featured in the Forbes “Cloud 100” list for 2020. Tech.co also included the company as one of the top providers of work OS software (“best for customization”), along with competitors ClickUp, Trello, and Asana.
Key Monday.com fundraising to know about
Monday.com originally set $100 million as their IPO fundraising goal, though that number was a placeholder. Companies often use $100 million as a placeholder until they set the pricing terms for their offering. Their 2019 valuation was $1.9 billion, after a $150 million Series D funding round. In 2020, that valuation increased to $2.7 billion.
Now, with a whopping $6.8 billion valuation, here’s how Monday.com got where they are today.
- Seed Round: A $1.5 million seed funding round took place in 2012, led by Entrée Capital (a UK-based venture capital firm that funds startups at all stages) and Genesis Partners.
- Series A: Fast-forward to 2015, when the company held their Series A round. This round raised $7.6 million led by prior investor Entrée Capital.
- Series B: The Series B was held in 2017 with a total of three investors. Insight Partners took the lead on this round that raised a total of $25 million for Monday.com.
- Series C: In 2018, Monday.com raised $50 million in their Series C fundraising round. Stripes, a New York-based growth equity firm, was the lead investor.
- Series D: 2019 was their largest funding round to date. Venture capital fund Sapphire Ventures led monday.com’s Series D to bring in $150 million for the firm. Other investors at that time were Hamilton Lane, HarbourVest Partners, ION Crossover Partners, and Vintage Investment Partners.
- Secondary Market: A year ago (May 2020), Monday.com held a secondary share sale in a private deal that resulted in a $2.7 billion valuation. That was a major jump from their $1.9 billion valuation in 2019.
All told, Monday.com raised $234.1 million over six funding rounds (according to Crunchbase data). However, SeekingAlpha reported that total to be at least $347 million. Whatever the case, their IPO fundraising exceeded those numbers by a prominent margin.
Path to the Monday.com IPO
The primary underwriters of the transaction for Monday.com’s IPO were Goldman Sachs and J.P. Morgan. Allen & Company LLC and Jefferies were joint book-running managers, while William Blair, Piper Sandler, Oppenheimer & Co., Canaccord Genuity, Cowen, and Needham & Company were co-managers.
At the end of March 2021, Monday.com had $124.3 million in cash and $168.1 million in total liabilities. The company had negative free cash flow during the twelve months that ended March 31, 2021 at $41.5 million.
Dollar-based net revenue retention rate was 121%. At well over 100%, this was a good sign—it demonstrates good product and market fit as well as efficient sales and marketing. For all customers, not just larger companies, that rate was 107% in March 2021.
When was the Monday.com IPO date?
Monday.com published a press release May 17 announcing they had filed a registration Form F-1 with the SEC. While American companies going public in the U.S. market use a form S-1, foreign securities use an F-1. The number of shares to be offered and the proposed price range are not settled yet.
Monday.com completed their IPO on June 10, 2021. They are listed under the ticker symbol “MNDY” on the Nasdaq Global Select Market. Once the IPO became finalized, co-founder and CEO Roy Mann obtained one Founder share, which affords him certain veto rights in the public company.
Important risks and opportunities following the Monday.com IPO
Monday.com’s SaaS services are likely to continue growing in demand as more of the world moves online. Roy Mann, the company’s CEO, said last year that the pandemic had impacted their business projections: “We’re solving the same problems we used to solve, only now they’ve gotten more acute when working from home.”
Eran Zinman, co-founder and Chief Technology Officer, echoed Mann’s thoughts. Zinman explained that remote work had highlighted the importance of the right tools to manage assignments and keep communication open.
Bloomberg reported in May of this year that enterprise software firms like Monday.com—who make revenue selling products to other companies—are performing well in the market. As an example, UiPath, an automation software firm, had risen 24% from its IPO price a month prior.
The CAGR for low-code software such as Monday.com is forecast to be 28.1% from 2021 to 2025. MarketsandMarkets reported that the global market for this business was $13.2 billion in 2020, and that figure is anticipated to reach $45.5 billion by 2025.
The company reported that in Q1 of 2021, about 70% of work done on their platform replaced tools like spreadsheets, emails, and meetings, leaving only 30% as competition with other product solutions.
As a client company grows, they may become more attached to Monday.com’s platform because they will be able to use a large number of customized workflows, which is a positive for Monday.com’s projections.
Monday.com may face challenges in distinguishing themselves from the likes of Asana, Zendesk, Atlassian, and many others in the productivity industry, but the severity of the competition depends on how much of the market share other businesses are able to snag.
Monday.com doesn’t meet the Rule of 40 that says combined revenue growth rate and EBITDA percentage rate of at least 40% is an acceptable trajectory. The company’s calculation in this metric was just 21% as of March 31, 2021.
Though revenue and gross profit have increased, Monday.com’s operating losses are still high, which is a negative factor in the early days of Monday.com being a publicly traded company.
Related: What to know about the 2021 Warby Parker IPO
Bottom Line
Though not everyone loves a Monday, the timing seemed to be right for a Monday.com IPO in 2021. With the rise in work-from-home situations and demand for companies providing business-to-business tech and software, the Monday.com IPO was on many an investor’s watchlist. No matter the IPO, doing your due diligence by researching a company before investing your money is a smart move.