Summary
This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that you should consider before deciding to invest in our ordinary shares. You should read the entire prospectus carefully, including the “Risk Factors,” “Business,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and our consolidated financial statements, including the notes thereto, before making an investment decision.
monday.com democratizes the power of software so organizations can easily build software applications and work management tools that fit their needs. We call our platform ‘Work OS’, and we believe we are pioneering a new category of software that will change the way people work and businesses operate.
Our platform consists of modular building blocks that are simple enough for anyone to use, yet powerful enough to drive the core functionality within any organization. Our platform also integrates with other systems and applications, creating a new connective layer for organizations that links departments and bridges information silos.
By using our platform, our customers can simplify and accelerate their digital transformation, enhance organizational agility, create a unifying workspace across departments, and increase operational efficiency and productivity.
We believe software should empower businesses, not limit them. However, organizations are often forced to use rigid, function-specific software and disconnected tools that prevent them from operating productively and effortlessly. These constraints lead organizations to use multiple tools to fit their needs, resulting in inefficient workflows, data and employee silos, broken communication channels and insufficient institutional knowledge. As a result, organizations manage and evaluate their operations with an incomplete view of their businesses, limiting their ability to grow and move efficiently.
Our Work OS turns this paradigm upside down. It allows organizations to create software applications and work management tools that suit their needs across virtually any use case. By connecting them to other systems and applications, we then eliminate corporate silos and facilitate cross-functional workflows. With our platform, organizations have a holistic view of their businesses and are able to work with more agility, become more productive and increase operational efficiency.
Our cloud-based platform is a no-code and low-code framework. It consists of modular building blocks that allow our customers to create their own software applications and work management tools with robust capabilities and an enjoyable user experience. The categories of building blocks include items, columns, views, automations, integrations and widgets. With the platform’s no-code capabilities, customers can adapt each building block to build software applications and tools that fit their desired use case and evolving needs. This makes the platform both easy to adopt and scale over time.
We focus on advancing and developing new building blocks, thereby creating new possibilities across our entire platform. We also empower our customers and external developers to do the same by building their own apps and building blocks with our low-code apps framework.
The combination, customization and adaptability of these building blocks, and the compounding effect they create, allows us to expand the capabilities of our Work OS and enter new markets quickly and efficiently.
Our users have the ability to seamlessly leverage the same building blocks for a broad number of use cases. As a result, our customers use our platform to tackle obstacles they face, either by designing new software applications and work management tools or by easily integrating such tools with existing third-party solutions. We believe this makes our Work OS a core solution that customers rely on to run their operations.
As of March 31, 2021, we served 127,974 customers across over 200 industries in more than 190 countries. Our customers use our platform for thousands of use cases, typically deploying our software in one of the following three categories: (1) to build business-critical software applications, (2) to build work management tools and (3) to act as a connective layer to form a unified workplace and integrate applications across an organization.
Below is a representative list of our customers, which provides illustrative examples of a few of the business verticals and use cases for our platform. No single customer listed below accounted for more than 1% of our revenue in the years ended December 31, 2019 and 2020 and for the three months ended March 31, 2021. As of March 31, 2021, each customer listed below was a customer with more than 10 users, which means that such customers are representative of the core focus of our sales and marketing efforts. Additionally, the list of customers below includes both enterprise customers and non-enterprise customers.
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Universal Music Group, the world’s leading music company, uses our platform as a standard across multiple territories, departments and labels for cross-departmental initiatives, label relations, campaign management, project management, information technology (“IT”) operations, iteration tracking and more;
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HubSpot, Inc., an American developer and marketer of software products for inbound marketing, sales and customer service, uses our platform as a connective layer; integrating with external human resources software and collaboration tools to enhance and optimize its employee onboarding process and connect departments, people, data and processes;
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Oscar Insurance Corporation, a health insurance company built around a full-stack technology platform, uses our platform as a unifying workspace to connect its 45 scrum teams to manage their backlogs and product roadmap as well as enable other departments to run multiple initiatives involving numerous internal and external stakeholders;
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Indosuez Wealth Management, the global wealth management brand of Crédit Agricole Group, which is the world’s largest cooperative financial institution, uses our platform as a unifying workspace, bringing together several global entities to centralize data and provide executives with a single source of verified information;
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The National Hockey League, the world’s premier professional ice hockey league, uses our platform within its IT department to track its development efforts and build new work tools for over 30 business units; and
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The Ray White Group (Real Estate) Partnership, the largest real estate franchise in Australia and New Zealand, uses our platform as a customer relationship management interface to manage leads, with the added benefit of automated lead nurturing through an email integration and notification system.
Our focus on seamless adoption of our platform starts with ensuring that customers can easily and independently get up and running on our Work OS. This is accomplished through a self-serve funnel where virtually any user can sign up and immediately gain value, regardless of their technical skills.
Once customers adopt the platform and realize its value, their usage often grows organically, expanding across use cases and departments. As this expansion takes place virally, it is also accelerated through our sales-assisted motions and our partners network. Our customer success teams engage with our customers in an effort to help them grow and achieve their business objectives through our platform. This has created a successful growth cycle: 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 to our customers.
As a result of this strategy, we have recently experienced significant growth in our larger customers. For example, the number of enterprise customers on our platform, which we define as customers with more than $50,000 in annual recurring revenue (“ARR”), grew from 76 as of December 31, 2019 to 264 as of December 31, 2020, representing an increase of 247%, and from 105 as of March 31, 2020 to 335 as of March 31, 2021, representing an increase of 219%. We define ARR to mean, as of a measurement date, the annualized value of our customer subscription plans assuming that any contract that expires during the next 12 months is renewed on its existing terms. ARR should be viewed independently of revenue and any other measure prepared in accordance with the U.S. Generally Accepted Accounting Principles (“GAAP”).
This strategy is augmented by our Product Solution go-to-market approach. Product Solutions are complete products, horizontal or vertical, built on top of the Work OS platform (“Product Solutions”). We customize the user experience across the customer lifecycle, from initial discovery through marketing campaigns to onboarding with pre-designed templates and workflows, leading to end-to-end Product Solutions.
We recently expanded the scope of our building blocks by extending our platform to external developers through a low-code framework and an apps marketplace. The apps framework and marketplace allow customers, partners and external developers to easily create their own building blocks and apps.
Our culture is why we win. Our culture is more than a catch phrase or a poster on a wall. It is what we do. It is how we act. Our culture is the ‘monday.com way.’
The ‘monday.com way’ includes five key elements that guide our actions: (i) transparency and trust, (ii) customer-centricity, (iii), product-first, (iv) ownership and impact, and (v) speed and execution. We carry out these values throughout every aspect of our business, both at the individual level and as a collective organization. These values instill a deep sense of commitment in every person on our team, empower us all to make informed decisions with speed, and focus our efforts on serving our customers through amazing product experiences. We believe the monday.com way has been a key factor in our success and a key differentiator for our business.
We have experienced rapid growth since launching our product in 2014. Our revenue was $78.1 million and $161.1 million for the years ended December 31, 2019 and 2020, respectively, representing an increase of 143% and 106% in the years ended December 31, 2019 and 2020, respectively. Our revenue was $31.9 million and $59.0 million in the three months ended March 31, 2020 and 2021, respectively, representing a period-over-period growth of 85%. Additionally, we had a net loss of $91.6 million, $152.2 million, $19.9 million and $39.0 million for the years ended December 31, 2019 and 2020 and the three months ended March 31, 2020 and 2021, respectively. We had negative net cash used in operating activities of $36.7 million, $37.2 million, $5.1 million and $0.6 million in the years ended December 31, 2019 and 2020 and the three months ended March 31, 2020 and 2021, respectively, with negative adjusted free cash flow of $38.4 million, $40.7 million, $6.0 million and $1.6 million for the years ended December 31, 2019 and 2020 and the three months ended March 31, 2020 and 2021, respectively. Adjusted free cash flow is a non-GAAP financial measure. For additional information concerning the limitations and reconciliations of our non-GAAP financial measures to the most directly comparable financial measures stated in accordance with GAAP, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.”
From inception through March 31, 2021, we have used approximately $121 million of capital to finance our operations, generating more than $2 of ARR for every $1 of capital used in such time. We define capital used to finance our operations as the amount of proceeds generated from our financing rounds from inception through March 31, 2021, less cash and cash equivalents and short-term bank deposits as of March 31, 2021, plus borrowings under the Revolving Credit Facility (as defined herein) as of March 31, 2021.
We believe we are at the center of generational shifts in technology and the way people work that create significant opportunities for our business, including the following trends:
Organizations are digitizing the workstreams previously performed in physical environments and reengineering their existing digital processes to gain more speed and efficiency. Flexible and adaptable software will determine the success of these digital transformation efforts and how businesses will compete in the digital era. According to International Data Corporation (“IDC”), 65% of global gross domestic product is expected to be digitized by 2022, driving over $6.8 trillion in global spending on digital transformation from 2020 to 2023.
According to Oliver Wyman, as of April 2018, nearly 90% of chief innovation officers and related roles said agility was highly important to the future success of their companies and 95% said they needed to become more agile in the future. However, only 26% rated their company’s agility as high or greater. To close this gap and keep pace with rising customer expectations and evolving needs, organizations are increasingly relying on software to increase their agility and become more resilient to change.
Organizations are increasingly adopting distributed models of work across geographies through a combination of on-site and remote locations. According to Gallup, 33% of U.S. workers worked exclusively from home as of September 2020, while another 25% of U.S. workers will pursue employment which allows them to work partially from home in the future. Additionally, teams must increasingly work together and across departments within organizations to collectively address problems and achieve optimal outcomes. As a result, organizations are becoming more reliant on software to foster a culture of inclusion and drive business success.
Historically, the full power of software was only accessible to a limited number of highly trained employees who could manipulate and customize it based on their organization’s preferences. The digital transformation of organizations and increasing need for flexible solutions to address evolving and complex problems have made it necessary for a larger portion of the 1.25 billion global information workers (according to Forrester in 2018) to be able to create software tools to fit their needs.
Software has historically been too complex, unapproachable and expensive for end users to access. More recently, software design has focused more on user experience and enabling frictionless adoption. Additionally, the internet has allowed users to download, experiment and purchase software on their own, and the emergence of the software-as-a-service industry has also enabled users to more easily adopt software. We believe these trends are important to democratizing the power of software for everyone and fostering a culture in which users enjoy using their software.
Recent advancements in software automation have the ability to transform human potential and productivity. Automation eliminates manual, repetitive work and enables information workers to focus on deeper, more impactful work, eliminate manual mistakes and increase productivity.
Existing approaches to software have many or all of the following limitations:
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Constraining Architectures. Most software has been built to standardize repetitive workflows and processes. These architectures are rigid and use a common interface for all users accessing the software. These limitations force users to conform and adapt their working styles to the software in order to solve problems a certain way.
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Ease of Use versus Complexity Tradeoff. On one hand, software designed to be easy to use is unable to meet the demands of today’s work environment. On the other hand, software designed to handle complexity is difficult to use. Users are often forced to bridge this gap by using additional tools.
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Function-Specific Orientation Leads to Silos. Software solutions have typically addressed use cases for specific functions within a company, including sales, marketing, human resources and engineering, among others. However, this function-specific approach leads to silos within organizations as each department works within their own specific toolset and learns from data that is only available to them. This, in turn, leads to organizations having an incomplete view when making decisions and experiencing difficulty in efforts that require cross-functional work.
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Work and Communication Are Disjointed. Users tend to communicate through separate platforms from where they operate and work, resulting in repetitive and redundant meetings and double work. This results in slow processes, poor visibility across companies and uninformed decision-making.
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Manual, Error-Prone and Repetitive. Existing tools often lack automation capabilities. This results in significant amounts of employees’ time spent on manual and error-prone work that reduces their productivity and limits efficiency.
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Closed Platforms that Lack Integration. The majority of software currently on the market requires coding to integrate and synchronize data with other platforms and tools. The lack of integration, cooperation and openness amongst these tools often results in organizations and users being forced to use certain limiting software, regardless of whether it is the optimal solution for the specific use case.
Organizations have historically run their businesses completely dependent on pre-packaged software. They also relied on solutions internally developed by a fraction of their employee base who did not fully understand the way users think and want to work. As a result, organizations were forced to manage and run their businesses to fit the software they were provided, instead of in a way that fits their needs. These rigid frameworks limited their ability to work efficiently and with agility, grow their businesses and have a complete perspective of their businesses.
Work OS is our vision for democratizing the power of software for everyone so organizations can easily build software applications and work management tools that fit their needs. Our Work OS allows users, teams and organizations to create their own Product Solutions to suit their specific and ever-growing needs and gives organizations a unified view of their operations. As adoption of our Work OS grows within an organization, it becomes the unified workspace that acts as the connective layer across all of their applications and departments.
Our Work OS is broadly applicable for any organization and team across a growing number of use cases. According to estimates from IDC, our total addressable market was $56.1 billion in 2020 and will grow to $87.6 billion in 2024, representing a 4-year compounded annual growth rate (“CAGR”) of 12%.
With our Work OS, organizations can build software applications and work management tools to fit their needs. Our no-code and low-code platform consists of modular building blocks that are simple enough for anyone to assemble yet powerful enough to build solutions that drive the core functionality of any organization in any vertical. On top of our Work OS, we are building Product Solutions, including software applications and work management tools, for verticals such as marketing, customer relationship management (“CRM”), project management, software development and more. The Product Solutions are built with our building blocks and apps to answer specific needs.
Users use boards to hold any information and processes they have, within items and columns. Our schemaless database infrastructure is completely flexible, allowing users to easily define the way they capture and present data.They use views to manipulate and consume that board information in different ways. Users can create forms to capture data from anyone, including non-monday.com users.
Integrations pull data from other applications into the board, export data to other systems and synchronize data across applications. Automations eliminate repetitive manual processes, saving time and reducing human error.
Users build dashboards that pull data across many boards so stakeholders can get a complete high-level view on anything they may want. Users can access a variety of monday.com “stores” to further customize any kind of building block: for example, the column store allows customers to add new data types to any board, including location, formulas, numbers, text and dates. The views store provides different types of interactive interfaces, including calendar, location and timeline views. The dashboard widget store includes many widgets such as graphs, lists and numbers for use in any dashboard layout customers want to create. Users can organize their boards and dashboards using workspaces.
External developers can extend the platform and develop their own views, dashboard widgets, integrations and automations with our low-code framework. The result is a platform that is virtually limitless and can solve nearly any complexity related to a business.
We recently expanded the scope of our building blocks by extending our platform to external developers through a low-code framework and a new apps marketplace. Our low-code framework and flexible application programming interface allows customers, partners and external developers to easily create their own building blocks and apps, either for private or public use. Developers and app builders can also distribute their building blocks and solutions through our apps marketplace.
Our platform enables customers to:
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Democratize the Power of Software to All Users. The possibilities of our platform are virtually endless, as it enables each user to manipulate and access software in ways that fit their needs.
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Accelerate Digitization. Our platform helps our customers digitize their business operations and reengineer existing digital processes to make them more efficient. This enables our customers to increase their organizational agility, speed and efficiency.
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Create a Unified Workspace. By serving as a connective layer, our platform brings organizations’ departments, applications and data into a unified workspace. As of March 31, 2021, 84% of our enterprise customers used integrations to connect our platform to other tools and systems used within their organization. This enables organizations to make complete, data-driven decisions, eliminate silos across the organization and centralizes all tools in one place.
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Make Data-Driven Decisions. Everything in our platform is data, which can be tracked, measured and analyzed. Our customers are able to capture new insights that were previously unavailable to them. This allows them to implement more data-driven decision making.
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