Cloud project management provider Monday.com closes up 15% after IPO raises $574M
Shares of Monday.com Ltd. rose more than 15% in their trading debut on the Nasdaq today, following an initial public offering that surpassed expectations and raised $574 million.
The company is now worth nearly $8 billion. Israel-based Monday.com provides a popular project management platform of the same name that is used by employees at Adobe Inc., Coca Cola Co., Unilever PLC and other major brands. The platform enables workers to track the progress of a project in a cloud-based dashboard.
In the Monday.com interface, workers can see what tasks have to be done to complete the project. The platform allows users to customize how the interface displays tasks according to their requirements. Monday.com can display tasks on a list, a map, a timeline that also shows the specific order in which the individual to-do items have to be performed, and in various other formats.
By making it easier for teams to organize their work, Monday.com has built up a user base of more than 120,000 organizations. Those customer accounts generated $161.1 million in revenue for the company in 2020. Monday.com more than doubled its sales that year compared with 2019 and, in the first three months of 2021, posted 85% growth.
The company, like many fast-growing cloud software providers, is not yet profitable. Monday.com has been making big investments to sustain its sales momentum: it closed 2019 with a loss of $91.6 million that climbed to $152.2 million in 2020. During the first three months of 2021, the company lost $39 million.
Monday.com’s better-than-expected Nasdaq debut shows that investors aren’t too concerned about profitability for the time being given its rapid growth. The company had originally planned to sell 3.7 million shares for $125 to $140 apiece. Monday.com’s shares fetched $155 apiece during the IPO and jumped above $170 in trading today.
The company’s strong sales momentum is partly the result of rapidly increasing demand from large enterprises. Between the end of 2019 and the end of 2020, the number of large enterprise customers using its platform rose 247%, to 264. The amount those customers spent on Monday.com’s platform rose even faster, nearly tripling during the 12 months ended Dec. 31.
Monday.com explained the context behind the upward trend in clients’ spending on its platform ahead of its IPO. “The more value customers gain from our platform, the more new users and use cases are added by such customers, which in turn adds even more value,” the company stated in its IPO filing. “As a result, as of April 30, 2021, 96% of our enterprise customers use monday.com for at least two Product Solutions and 63% of our enterprise customers use monday.com for at least three Product Solutions.”
The company has sought to provide more value for its customers by building additional capabilities atop its core project management feature set. It has focused on two areas in particular: automation and analytics.
In 2019, Monday.com introduced a workflow automation tool that allows users to trigger actions in response to certain events. For example, a software team lead can configure Monday.com to alert developers when a high-priority feature request is added to the list of outstanding tasks. The company says that such workflows can save tens of thousands of manual actions a month for large teams by automating repetitive tasks.
Monday.com also provides analytics capabilities in the form of dashboards that visualize high-level project metrics. Managers can consult the data visualizations to find opportunities to improve operations.
Monday.com’s major competitors include Asana Inc., which went public last year, and Atlassian Corp. PLC’s Trello service. The latter two firms have also added more automation features and other value-added capabilities to their platforms over the last few years to win more enterprise customers.
Monday.com’s IPO today, under the ticker symbol MNDY, is a major win for investor Insight Partners, which owned more than 40% of the company at the time its IPO filing was released. Insight Partners led a $25 million funding round for Monday.com Inc. in 2017, two years before the company’s valuation passed the $1 billion mark. Given that Monday.com is now worth more than $6.8 billion, the venture capital firm likely realized a significant return on its investment.
Monday.com co-founders Roy Mann and Eran Zinman (pictured) owned more than 20% of the company at the time the IPO filing was released.
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