Monday.com Shares Jump At IPO, Minting A New Cloud Software Billionaire In Israel

Cloud computing companies that have recently faced turbulence on the public markets can take heart from the strong debut of a new entrant to the market, Monday.com.

Shares of the Israel-based software business priced at $155 and were trading at around $174 as of midday Thursday, giving monday.com a market capitalization of about $7.6 billion and making co-CEO Roy Mann a billionaire.

“We really wanted to build a long-term, big company, and an IPO is a milestone on the way,” says Mann, who co-founded the business with Eran Zinman, now monday.com’s co-CEO, in 2012. “It was a time that the company was mature, and the market seemed to be in a great position, so it was perfect timing.”

Originally called dapulse, monday.com (the company styles it without the capitalization) launched out of Tel Aviv, where Mann was an executive at Wix looking for a better way to manage his team through software. He tapped Zinman, then running research and development at mobile company Conduit Mobile, and the two released a product in early 2014 that offered task management and team update boards. In 2017, dapulse rebranded as monday.com, a nod to their international audience (work weeks start on Sundays in Israel). The following year, the company reached a $550 million valuation amid U.S. expansion (it now has offices in New York, as well as London and Sydney).

By the time monday.com tripled its valuation to $1.9 billion in 2019, the company was focusing on integrating other work apps into monday.com, and billing its software more as a no-code, easily customizable work platform to use for projects far from task management or tracking projects. Speaking from Nasdaq’s offices, where the company rang the opening bell on Thursday, Mann argued that the company always envisioned itself as more of a “work operating system” that simply leaned on project management early on to reach customers, who now use the software to run everything from hotels to manufacturing plants. Customers include Oscar, Universal Music Group and the NHL.

“I think long-term, what will unfold in a few years is we’ll e giving people the power to control their destiny so they can build whatever they need to run their business and their operations,” Mann says. “What’s going to win is the ability to give people the power.”

Monday.com closed 2020 with $161 million in revenue, up 106% from the year before. Using its most recent quarter, the company projects an annualized revenue run rate of $236 million for this year, on growth of 85%.

At its stock price in trading on Thursday, co-CEO Mann, 42, is now a billionaire, his roughly 6 million shares of the company carrying a value just over $1 billion. Zinman, 38, stepped up from a CTO role to co-CEO in November 2020. He owned about 2.3 million shares of Monday.com at IPO, valuing his stake at about $400 million.

A relatively modest “IPO pop” of 10% to 15% is unlikely to draw the excitement of proponents of a direct listing, an alternative to the traditional IPO, in which a company begins trading off a reference point but doesn’t sell shares at a fixed kick-off price. Monday.com didn’t leave much money on the table even by such reckoning; speaking just before the stock started trading, Zinman said he and Mann weren’t worrying about the company’s first-day trading price. Choosing its investors to be long-term allies, he says, was the company’s priority. “How much it will pop is irrelevant when you build a company for the long term future,” Zinman says.

The money helps, too, and Monday raised $574 million in the process. Perhaps most important for its long-term trajectory: some of its new reserves come from Zoom and Salesforce, both of which invested in the company in a private placement as part of the IPO. “For us, it’s a testament that they really believe in our story — and the stock,” Zinman adds.

Despite some IPO watchers noting that monday.com’s sales and marketing spend has increased in recent years — the business isn’t profitable, with losses accelerating to nearly $63 million in Q4 of 2020 — Mann and Zinman point to the fact that the company spent just $121 million of the $234 million it raised as a private company. With 120,000 customers, 70% outside of tech, and net retention rates recently about 120%, monday.com’s founders argue instead that the market in which it operates is still rapidly developing.

“We see a massive opportunity for all the companies in the space,” Mann says. “And we want to be there with a lot of passion to build great products.”