monday.com Ltd. [MNDY] Filings

 

 

 

FY2023 20-F

 

 

(1)

Non-GAAP measures. See “Part 4 - Operating and Financial Review and Prospects - Non-GAAP Financial Measures”.

 

(2)

For definition of ARR and Net Dollar Retention see “Part 4 - Operating and Financial Review and Prospects - Key Business Metrics”.

 

(3)

As of December 31, 2023.

 

2

FY2023 20-F

 

 

 

(1)

as of December 31, 2023.

 

3

 

FY2023 20-F

 

2023 milestones

 

 

 

4

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 20-F

 

 

☐	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

 

OR

 

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended December 31, 2023

 

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

OR

 

☐	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

Commission file number: 001-40461

 

 

monday.com Ltd.

 

(Exact name of Registrant as specified in its charter)

 

  

 

ISRAEL

 

(Jurisdiction of incorporation or organization)

 

6 Yitzhak Sadeh Street, Tel Aviv, 6777506 Israel

 

(Address of principal executive offices)

 

Shiran Nawi, Adv. 

Chief People and Legal Officer

 

Telephone: +972(55) 939-7720

 

monday.com Ltd. 

6 Yitzhak Sadeh Street

Tel Aviv, 6777506 Israel

 

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class	Trading Symbol		Name of each exchange on which registered
Ordinary shares, no par value per share	MNDY		The Nasdaq Stock Market LLC

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: None.

 

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

 

None.

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: As of December 31, 2023, the registrant had outstanding 48,923,903 ordinary shares, no par value per share.

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

 

Yes ☒ No ☐

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

 

Yes ☐ No ☒

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes ☒ No ☐

 

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

 

Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐
		Emerging growth company ☐

 

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

 

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP ☒

International Financial Reporting Standards as issued by the International Accounting Standards Board ☐

Other ☐

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. 

☐  Item 17 ☐ Item 18

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

FY2023 20-F

 

Table of contents

 

Cross Reference Table Form 20-F	10
Introduction	12
Special note regarding forward-looking statements	12
Part 1 - Who We Are	15
Our growth strategies	17
Our success by numbers	18
Industry trends	19
Our opportunity	20
Our platform	21
Our products	22
Key benefits to our customers	25
monday AI	26
The components of our platform	27
Our technology and in-house tools	30
Our customers	31
Research and development	31
CRO Team	32
Our competition	34
Intellectual property	35
Legal proceedings	35
monday.com ESG	35
Privacy and security	36
Our facilities	37
Our workforce	38
The monday.com Digital Lift Initiative	40
Emergency Response missions	42
Organizational structure	43
Part 2 - Directors and Senior Management	44
Executive officers	45
Directors	46
Part 3 - Major Shareholders and Related Party Transactions	48
Major shareholders	48
Related Party Transactions	50

 

Table of contents 8

 

FY2023 20-F

 

Part 4 - Operating and Financial Review and Prospects	52
A. Operating Results	56
B. Liquidity and Capital Resources	64
C. Research and development, patents and licenses, etc.	66
D. Trend information	66
E. Critical Accounting Estimates	66
F. Recently Issued Accounting Pronouncements	68
G. Quantitative and Qualitative Disclosures About Market Risk	68
Part 5 - Consolidated Statements and Additional Financial Information	70
Consolidated Financial Statements	70
Controls and procedures	70
Principal accountant fees and services	71
Legal Proceedings	72
Dividend Policy	72
Significant Changes	72
Taxation	72
Part 6 - Risk Factors	85
Part 7 - Additional Information	146
About Us	146
Compensation	148
Board practices	152
Employees	162
Borrowing powers	162
Material Contracts	162
Exchange Controls	163
Documents on Display	163
Code of ethics	163
Purchases of equity securities by the issuer and affiliated purchasers	163
Corporate governance	163
Cybersecurity	164
Exhibits	167

 

Table of contents 9

 

FY2023 20-F

 

Cross Reference Table Form 20-F

 

1	Identity of Directors, Senior Management and Advisers	N/A
2	Offer Statistics and Expected Timetable	N/A
3	Key Information
3.B.	Capitalization and Indebtedness	N/A
3.C.	Reasons for the Offer and Use of Proceeds	N/A
3.D.	Risk Factors	85-145
4	Information on the Company
4.A.	History and Development of the Company	146
4.B.	Business Overview	15-42
4.C.	Organizational Structure	43
4.D.	Property, Plants and Equipment	37
4A	Unresolved Staff Comments	N/A
5	Operating and Financial Review and Prospects
5.A.	Operating Results	56-64
5.B.	Liquidity and Capital Resources	64-66
5.C.	Research and Development, Patents and Licenses, etc.	66
5.D.	Trend Information	66
5.E.	Critical Accounting Estimates	66-68
6	Directors, Senior Management and Employees
6.A.	Directors and Senior Management	44-47
6.B.	Compensation	148-152
6.C.	Board Practices	152-162
6.D.	Employees	162
6.E.	Share Ownership	48-50 146-147
6.F.	Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation	N/A
7	Major Shareholders and Related Party Transactions
7.A.	Major Shareholders	48-50
7.B.	Related Party Transactions	50-51
7.C.	Interest of Experts and Counsel	N/A
8	Financial Information
8.A.	Consolidated Statements and Other Financial Information	171-212
8.B.	Significant Changes	72

 

Cross Reference Table Form 20-F 10

FY2023 20-F

 

9	The Offer and Listing
9.A.	Offer and Listing Details	N/A
9.B.	Plan of Distribution	N/A
9.C.	Markets	N/A
9.D.	Selling Shareholders	N/A
9.E.	Dilution	N/A
9.F.	Expenses of the Issue	N/A
10	Additional Information
10.A.	Share Capital	146
10.B.	Memorandum and Articles of Association	146
10.C.	Material Contracts	162
10.D.	Exchange Controls	163
10.E.	Taxation	72-84
10.F.	Dividends and Paying Agents	N/A
10.G.	Statement by Experts	N/A
10.H.	Documents on Display	163
10.I.	Subsidiary Information	N/A
10.J.	Annual Report to Security Holders	N/A
11	Quantitative and Qualitative Disclosures About Market Risk	68-69
12	Description of Securities Other than Equity Securities	N/A
13	Defaults, Dividends Arrearages and Delinquencies	N/A
14	Material Modifications to the Rights of Security Holders and Use of Proceeds	N/A
15	Controls and Procedures	70-71
16A	Audit Committee Financial Expert	155-156
16B	Code of Ethics	163
16C	Principal Accountant Fees and Services	71
16D	Exemptions from the Listing Standards for Audit Committees	N/A
16E	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	163
16F	Change in Registrant’s Certifying Accountant	N/A
16G	Corporate Governance	163-164
16H	Mine Safety Disclosure	N/A
16I	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	N/A
16K	Cybersecurity	164-166
17	Financial Statements	N/A
18	Financial Statements	171-210
19	Exhibits	167-168

 

Cross Reference Table Form 20-F 11

FY2023 20-F

 

Introduction

 

In this annual report, references to “we,” “us,” “our,” “our business,” “the Company,” “monday.com” and similar references refer to monday.com Ltd. and, where appropriate, its consolidated subsidiaries.

 

This annual report contains estimates, projections and other information concerning our industry and our business, as well as data regarding market research, estimates and forecasts prepared by our management. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those discussed under the headings “Special Note Regarding Forward-Looking Statements” and “Part 6 - Risk Factors” in this annual report.

 

Special note regarding forward-looking statements 

 

 

•

foreign currency exchange rate fluctuations;

 

•

the fact that we continue to derive a majority of revenues from a single platform;

 

•

fluctuations in operating results;

 

Introduction 12

FY2023 20-F

 

•

real or perceived errors, failures, vulnerabilities or bugs or interruptions or performance problems in the technology or infrastructure underlying our platform;

 

•

risks related to artificial intelligence (“AI” ) or machine learning (“ML”) in offerings;

 

•

our ability to attract customers, grow our retention rates and expand usage within organizations, including cross selling and upselling;

 

•

risks related to our subscription-based business model;

 

•

our sales efforts may require considerable time and expense or may extend sales cycles, and downturns or upturns are not immediately reflected in full in results of operations;

 

•

our ability to offer high-quality customer support and consistent sales strategies;

 

•

our ability to enhance our reputation, brand, and market awareness of our products and maintenance of corporate culture;

 

•

risks related to actions by governments to restrict access to our platform and products or to require us to disclose or provide access to information;

 

•

risks related to international operations and compliance with laws and regulations applicable to our global operations;

 

•

difficulties in integration of partnerships, acquisitions and alliances;

 

•

risks associated with environmental and social responsibility and climate change;

 

•

our dependence on key employees and ability to attract and retain highly skilled employees;

 

•

our ability to raise additional capital or generate cash flows necessary to grow our business;

 

•

uncertain global economic conditions and inflation;

 

•

changes and competition in the market and software categories in which we participate;

 

•

our ability to maintain adequate research and development resources and introduce new products, features, integrations, capabilities, and enhancements;

 

•

the ability of our platform to interoperate with a variety of software applications;

 

•

our reliance on third-party application stores to distribute our mobile application;

 

•

our successful strategic relationships with, and our dependence on third parties;

 

•

our reliance on traditional web search engines to direct traffic to our website;

 

•

interruption or delays in service from third parties or our inability to plan and manage interruptions;

 

Introduction 13

FY2023 20-F

 

•

risks related to security disruptions, unauthorized system access;

 

•

evolving privacy protection and data security laws, regulations, industry standards, policies, contractual obligations, and cross-border data transfer or localization restrictions;

 

•

new legislation and regulatory obligations regulating AI;

 

•

changes in tax law and regulations or if we were to be classified as a passive foreign investment company;

 

•

our ability to maintain, protect or enforce our intellectual property rights or risks related to claims that we infringe the intellectual property rights of others;

  

•

risks related to our use of open-source software;

 

•

risks related to our founder shares that provide certain veto rights

 

•

risks related to our status as a foreign private issuer incorporated and located in Israel, including risks related to the ongoing war between Israel and Hamas and escalations thereof;

 

•

our expectation not to pay dividends for the foreseeable future;

 

•

the novelty of our Digital Lift Initiative;

 

•

risks related to legal and regulatory matters; and

 

•

other statements described in this annual report under “Part 1 - Who We Are,” “Part 4 - Operating and Financial Review and Prospects” and “Part 6 - Risk Factors,” as updated by subsequent reports filed with the U.S. Securities and Exchange Commission (“SEC”).

  

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that future results, levels of activity, performance and events and circumstances reflected in the forward-looking statements will be achieved or will occur. The estimates and forward-looking statements contained in this annual report speak only as of the date of this annual report. Except as required by applicable law, we undertake no obligation to publicly update or revise any estimates or forward-looking statements whether as a result of new information, future events or otherwise, or to reflect the occurrence of unanticipated events.

 

This annual report includes websites or references to additional company reports. These are intended to provide inactive, textual references only. The information on websites and contained in those reports is not part of this report and not incorporated by reference in this report. In addition, historical, current, and forward-looking environmental and social-related statements may be based on standards for measuring progress that are still developing and on controls and processes that continue to evolve. While certain matters discussed in this annual report may be significant, any significance should not be taken, or otherwise assumed, as necessarily rising to the level of materiality used for purposes of complying with the Company’s public company reporting obligations pursuant to the U.S. federal securities laws and regulations, even if the report uses the words “material” or “materiality.”

 

Introduction 14

FY2023 20-F

 

Part 1 - Who We Are

 

monday.com is a platform that runs the core of all work. The platform democratizes the power of software so organizations can easily build software applications and work management tools that fit their needs. We call our platform a “Work OS” (Work Operating System), and we believe we are pioneering a new category of software that will change the way people work and businesses operate, giving them one place to manage every part of their work.

 

Our cloud-based platform is a no-code and low-code framework that consists of modular building blocks that are simple enough for anyone to use, yet powerful enough to drive core business 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. On top of our platform, we have built a product suite to address the needs of specific industries and use cases — including monday work management, monday sales CRM, and monday dev. We also offer independent products that can be used without the platform, including WorkCanvas, a digital whiteboard, and WorkForms, which allows users to create personalized forms or surveys and gain organizational insights.

 

By using our platform and products, our customers can simplify and accelerate their digital transformation, enhance organizational agility, create a unifying workspace across departments, and increase operational efficiency and productivity. As of December 31, 2023, we served over 225,000 customers across over 200 industries in more than 200 countries and territories. The flexibility of our platform empowers our customers to run thousands of use cases — building business-critical software applications and work management tools, acting as a connective layer to form a unified workplace, and integrating applications across an organization.

 

 

  

Part 1 - Who We Are  15

FY2023 20-F

 

 

  

Part 1 - Who We Are  16

FY2023 20-F

 

Our growth strategies

 

We intend to drive the growth of our business by executing the following strategies:

 

	Evolve the Work OS platform.
	We have a strong  history of technological innovation, as we regularly release new building blocks and make frequent updates to our platform. Our unique  product architecture enables us to improve our platform and build  superior products rapidly and efficiently. We intend to continue making significant investments in research and development and hiring top technical talent to enable new use cases, serve more  verticals,  and increase enterprise-grade features on our platform.

 

 

Augment our vision with a versatile suite of Work OS-based and independent products.

We have  built  products on top of our platform that run the core  of work for organizations of all sizes, allowing customers to adapt the software on their  own and scale  with their  business. We customize the user experience across the customer lifecycle, from initial discovery through marketing campaigns to onboarding with pre-designed workflows, templates, automations, and  integrations. We prioritize the creation of new products, sharing a common code base, by focusing on customer demand and  go-to-market. Our product suite includes three  products:

  

	•	monday work management: manages workflows, projects, and portfolios to fuel team collaboration and productivity at scale
	•	monday sales CRM: tracks and manages all aspects of the sales cycle
	•	monday dev: builds agile product and software development workflows

 

We also have two additional, independent products based on specific customer needs: WorkForms, which allows users to create personalized forms or surveys and gain organizational insights, and WorkCanvas, a digital whiteboard for real-time, unstructured collaboration.

 

	Grow and invest in our ecosystem strategy.
	Our ability to innovate is amplified by our app marketplace, where external developers, channel partners, global system integrators, and customers are expanding our building blocks and creating new applications that fit a variety of use cases. Marketplace vendors can  choose to monetize their  apps through third-party payment systems directly from within the platform. We believe investing in our ecosystem will expand our addressable market, as we will be able to serve more customers in new verticals and  in regulated industries with greater security requirements.

 

	Provide more value to and increase the number of large accounts.
	We are constantly adding tools  and  services to drive  adoption and expansion to customers of all sizes while continuing to expand our focus on the needs  of larger enterprise accounts — including a dedicated Product Alignment Team  that builds with feedback from our enterprise-level customers. We will also continue to reach out to and  expand our partner ecosystem, to deepen and broaden product adoption and  scale.

 

Part 1 - Who We Are  17

FY2023 20-F

 

	Scale our go-to-market.
	Continue to scale our self-serve funnel complemented by expanding sales-led motion. Our focus on flexible and  simple adoption of our platform starts with ensuring that customers can easily  and independently get up and  running on one of our products built  on the platform. This is accomplished through a self-serve funnel where  virtually any user can  sign up and  immediately gain value, regardless of their  technical skills.

  

Drive growth by acquiring new customers. To drive new customer growth, we intend to continue investing in sales, marketing, and our partner ecosystem, with a focus on delivering complete products and tailored features for specific use cases, both top-down and bottom-up selling to engage both business users and decision-makers, paid and organic customer outreach, and more account-based marketing outreach efforts.

 

Drive increased adoption and expansion within our existing customer base. As our customers realize the benefits of our platform and products, they typically add more users and expand to other products and use cases within the platform, while expanding across different departments. As a result, our Net Dollar Retention Rate for customers with more than 10 users was 115% for the three months ended December 31, 2023, over 130% for the three months ended December 31, 2022, and over 135% for the three months ended December 31, 2021. We plan to continue investing in ways to expand within our existing customer base. For the definition of Net Dollar Retention Rate, see “Part 4 - Operating and Financial Review and Prospects – Key Business Metrics”.

 

Expand our global footprint. We will continue investing in local advertising channels, partnerships, events, and localizing our platform to address existing and new regions. We believe there is an opportunity to increase our global presence even further over time.

 

Our success by numbers

 

We have experienced rapid growth since launching our platform in 2014. Our revenue was $729.7 million, $519.0 million, and $308.2 million for the years ended December 31, 2023, 2022, and 2021, respectively, representing an increase of 41%, 68%, and 91%, respectively, over the prior year. Additionally, we had a net loss of $1.9 million, $136.9 million, and $129.3 million for the years ended December 31, 2023, 2022, and 2021, respectively. We had net cash provided by operating activities of $215.4 million, $27.1 million and $16.4 million in the years ended December 31, 2023, 2022 and 2021, respectively, with positive adjusted free cash flow of $204.9 million, $8.1 million and $9.9 million for the years ended December 31, 2023, 2022 and 2021, respectively. Adjusted free cash flow is a non-GAAP financial measure. For additional information and a reconciliation of this non-GAAP financial measure to the most directly comparable GAAP financial measure, see “Part 4 - Operating and Financial Review and Prospects - Non-GAAP Financial Measures”.

 

Part 1 - Who We Are  18

FY2023 20-F

 

Industry trends

 

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 their work

 

Organizations are digitizing the workflows previously run 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. Based on data from International Data Corporation ("IDC"), we forecast global digital transformation spending to reach nearly $3.9 trillion in 2027 with annual growth rate (“CAGR”) of 16.1% over a five-year period between 2023-2027.

 

Work is more distributed, cross-functional, and reliant on software

 

Organizations are increasingly adopting distributed models of work across geographies through a combination of on-site and remote locations. On one hand, average office use in early December 2023 reached up to 51.5% of what it was in early 2020 according to Kastle Systems, which tracks security swipes into buildings. On the other hand, according to Forbes Advisor, as of June 2023 41% of full time employees in the US are still working from home or at a hybrid work model.

 

As hybrid work becomes the norm, organizations need new ways to collaborate effectively across departments and locations. With increasingly inconsistent work settings, software is becoming critical to fostering a culture of inclusion, maintaining one source of truth for data, and driving business success.

 

AI is everywhere

 

In the past few years, to our estimation based on IDC data, the tech industry transitioned from novel AI use cases (like suggesting email copy) to more complex features. To our estimation, based on IDC data, companies that leverage AI with a collaborative culture will have the opportunity to better leverage creativity and critical thinking at all levels in delivering better results both for teams and for customers alike.

 

Employees are looking to maximize their productivity

 

In partnership with Rep Data, an independent research company, our team explored the global sentiment around productivity, time management,

 

Part 1 - Who We Are 19

 

 

FY2023 20-F

 

and workflow automation. While employees are looking to be productive in the most effective ways, employers want to ensure workers are the most productive with their tools and resources. According to Rep Data, employees use 10.5 technology tools monthly on average, and believe they could save 10+ hours weekly by consolidating these tools. Globally, 75% of employees believe that consolidation of their company’s toolset should be a high priority – with this number being higher in larger companies. As employees experience greater flexibility, it’s up to organizations to reexamine their infrastructure, processes, and operations to propel employees to success.

 

 

   

Our opportunity

 

Rise of the Work Operating System

 

Organizations have historically run their businesses completely dependent on pre-packaged software that require significant implementation and maintenance costs. As a result, organizations were forced to manage and run their businesses to fit the software they were provided with, instead of in a way that fits their needs. These rigid frameworks limited their ability to work efficiently and agilely, grow their businesses, and have a complete perspective of their data.

 

Work OS is our vision for democratizing the power of software. The monday. com Work OS platform allows users, teams, and organizations to create their own software applications and work management tools to suit their specific and ever-growing needs and scale. We designed our platform so that everything can be changed by our customers, this flexibility allows them to evolve as their company scales. We then took those building blocks ourselves and combined them into building new best-in-class, out-of-the-box products. With continued adoption, monday.com becomes the unified platform to run the core of all work, by acting as a connective layer across all of an organization’s applications and departments.

 

monday.com Work OS platform is broadly applicable for any organization or team across a growing number of use cases. Using data from IDC, we estimate that our total addressable market was $101 billion in 2023 and will grow to $150 billion in 2026, representing a four-year CAGR of 14%. We calculate these figures by summing the sizes of the following markets, which correspond to the most common use cases on our platform: project and portfolio management ($6 billion), collaborative applications ($39 billion), CRM applications ($30 billion), DevOps software tools ($17 billion) and IT service, operations and request management applications ($9 billion). Because our platform serves many different verticals, we believe we have the ability to grow our market opportunity rapidly and expect to add more verticals over time.

 

Part 1 - Who We Are 20

FY2023 20-F

 

Our platform

 

With monday.com Work OS platform, 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 business of any organization in any vertical. On top of the platform, we have built a suite of products, for the work management, sales CRM, and software development verticals, to address the needs of specific industries and use cases. Additionally, we have two independent products that can be used without the platform, to provide users with a digital whiteboard and forms for data collection.

 

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. monday workflows optimizes customers’ automations and allows them to manage more complex workflows across teams and products. AI capabilities allow users to automate task generation, build formulas, compose emails, and generate content. Users build dashboards that pull data across many boards so stakeholders can get a complete high-level view of 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. With monday workdocs, users can collaborate on documents in real-time and embed monday.com dashboards, images, videos, and more. Users can organize their boards, dashboards, and workdocs using workspaces.

 

Part 1 - Who We Are 21

FY2023 20-F

 

Upon discovering our platform, customers enroll in a 14-day free trial of our Pro plan for the product that fits their needs, after which they are prompted to either continue with our Free plan for small teams (limited to two users) or pay for one of our four paid subscription plans.

 

Our products

 

Thanks to the flexibility of our infrastructure, we are building end-to-end products on top of the monday.com platform. Each product is tailored to a specific business need and empowers our customers to run the core of their work on monday.com. By the end of 2023, our product suite included:

 

 

  

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We have two additional products, with differentiated pricing, designed to complement our platform:

 

 

 

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Our products serve as an entry point for specific industries and include tailored features to fit the needs of a specific industry’s use cases.

 

Our app marketplace

 

We expanded the scope of our building blocks by extending our platform to external developers through a no-code and low-code framework and app marketplace. Our framework and flexible application programming interface allow customers, partners, and external developers to easily create their own building blocks and apps, either for private or public use, while working with any of our products. Developers and app builders can also distribute their building blocks and solutions through our app marketplace. Marketplace vendors can choose to monetize their apps through third-party payment systems, or a payment processing system directly from within the platform. As of December 31 2023, we had 409 apps in the marketplace and 236 apps collecting payments.

 

 

 

monday code provides a secure, serverless environment within the Work OS platform, where developers can host and run apps with monday.com’s security and compliance standards built in. With monday code, developers are able to avoid the heavy lifting associated with setting up and managing production servers, allowing them to easily create apps that meet our customers’ unique requirements.

 

We have a growing community of partners across different channels and independent software vendors that are adding and expanding their businesses by leveraging our app marketplace. This includes Appfire & Adaptavist, two of the world’s largest enterprise collaboration app providers.

 

From cross-industry apps to diverse niche apps, we provide the platform and the tools needed to allow customers and vendors to easily build their own apps, which further supports the potential of our platform and our long-term growth.

 

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Key benefits to our customers

 

Our platform enables customers to:

 

Democratize the power of software to all users. As a no-code and low-code platform, the possibilities for customization and the level of control our platform offers are virtually endless.

 

Increase efficiency. Our platform helps our customers digitize their business operations and re-engineer existing digital processes to make them more efficient. By consolidating many software tools into one cross-departmental platform, we enable our customers to increase their organizational agility, speed, and efficiency.

 

Create a unified workspace. By serving as a connective layer, our multi-product platform brings organizations, applications, and data into a unified workspace. This enables our customers to make complete, data-driven decisions, eliminate silos across the organization, and centralize all tools in one place.

 

Make data-driven decisions. By working with data that can be tracked, measured, and analyzed, our customers can gain new insights and work more effectively. This allows them to implement more data-driven decision-making and work more effectively.

 

Increase productivity and deep working. We believe our platform greatly reduces the reliance upon meetings, communications, and emails. This gives employees significant time back to their days and unlocks greater potential. Additionally, our platform automates repetitive, manual, and error-prone work, which frees up time and energy to focus on more impactful work.

 

Enhanced company culture. Our platform helps foster a culture of inclusion, ownership, and clarity. By empowering everyone to think more holistically and have access to greater information, our platform helps promote better idea-sharing and brainstorming within an organization.

 

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The components of our platform

 

The key components of the platform include:

 

Boards: capture data and manage processes. Our boards are at the core of our platform, as they are the starting point upon which all functionality on our platform is built. Each board has the infrastructure of a schemaless database with an easy-to-use interface, which users can easily customize, populate, and build applications upon.

 

Items: customized to fit any use case. An item is a row within a board that can represent virtually anything a user chooses, including an entity, workstream, or campaign. Users populate items with actions, steps, leads, contacts, or other elements of a workstream.

 

Columns: represent data in a tailored way. Each item has a number of columns associated with it. Users add columns to identify owners of an item or workstream, track the status of an item, rate specific items, and add files related to the item, along with many more options. Users can also customize columns to fit virtually any use case.

 

 

   

Views: visualize and tailor a board’s contents for any need. Users can view and work with their data with multiple board view options. Each view is built for a different set of workflow needs.

 

monday workdocs: collaborate on a powerful doc that empowers users to turn words into actions. monday workdocs enables users to work simultaneously on the same shareable documents. Users can tag each other and embed boards and dashboards to collaborate within the context of their workflows and processes. They can co-edit, comment, and drag and drop text in real-time without disrupting other users working on the doc.

 

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Forms: capture data from others, including non-monday.com users. Users can create and collect data with intuitive, web-based, and easily shareable forms. Each submission generates a new item within the board, with all of the data supplied by the recipient automatically populated in the relevant columns.

 

Automations: save time and minimize human error by automating repetitive processes. Automations can be triggered when certain actions occur or thresholds are reached. They include automatically sending notifications, creating items, assigning ownerships and due dates, and moving items to other boards. Users can automate work using our predefined automation recipes or create their own.

 

 

 

Integrations: connect with external tools to share data and automate actions across tools. Integrations allow our users to connect with external tools to share data and automate actions across tools. Currently, our integration center includes integrations to other tools and growing, such as Gmail, Outlook, Jira, Salesforce, Google Drive, Dropbox, Stripe, Slack, GitHub, and Zendesk. Users can find additional integrations in our app marketplace or build their own using the monday.com API.

 

monday workflows: simplify the entire workflow creation process by utilizing drag-and-drop blocks. The monday workflows add-on optimizes customers’ automations and allows them to manage more complex workflows across organizations, departments, and monday.com products. This includes a workflows and connections center, robust workflow capabilities, and an AI prompt to workflow feature. monday workflows is also open to third party developers.

 

 

 

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Dashboards: a high-level view of everything happening across an organization. Users can create dashboards with summaries and reports from data across multiple boards to track progress across their monday.com account. These dashboards help visualize everything happening across their organization to enable data-driven decision-making.

 

 

  

Dashboard widgets: track all data on a single pane of glass. Users can select any dashboard widget according to the data they want to display to build a dashboard, with different visualizations of the data they want to track, all on one screen. Dashboard widgets allow users to immediately get the full picture of their organization, from the drill-down or high-level insights.

 

Workspaces: keep work organized as work scales. Users can organize and centralize boards and dashboards using workspaces, which are defined by any category the user chooses. In large organizations, for example, workspaces can represent an entire department or a team working on a cross-company project.

 

My Work: centralize all assigned items in a single place. My Work allows users to view and manage all the items that are assigned to them without needing to go into individual boards. Users can customize the data on their My Work to get an instant overview of everything they are working on.

 

Mobile application Mobile capabilities have become a key requirement for users as more work is done outside the office, including in industries where operational mobility is critical to success, such as construction or real estate. We have invested in our mobile development to ensure the high performance of our platform on smartphones and tablets. Our native mobile application is built for both iOS and Android and is designed to support mobile-first customer use cases. Our mobile application’s robust functionalities differ from the desktop version, as we designed it to be more compact and thumb-friendly, creating an easy-to-use, on-the-go experience.

 

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Our technology and in-house tools

 

Extensible technology platform

 

monday.com is a cloud-based, proprietary software-as-a-service platform that is built to be fully resilient and fault-tolerant while staying agile, flexible, and fast. To accomplish this, we utilize multiple data centers across multiple geographical regions of Amazon Web Services (“AWS”) and Google Cloud Platform.

 

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BigBrain collects and processes data from over 1.1 billion events per workday from multiple separate sources and aggregates it into one place that every employee can access. This enables our team to analyze and make informed decisions based on transparent data, in real-time. BigBrain includes various tools such as a landing page generator, AI brain for monday-related content search and activities, account’s data insights, an AB test tool, and media buying statistics tracking, all of which were built by our in-house team. BigBrain also aligns our team around key performance indicators (“KPIs”) and metrics. We proactively connect employees to the business status via an internal app we developed which is updated daily with high-level KPIs and strategically distributed data dashboards powered by BigBrain throughout our offices.

 

We believe BigBrain supports our core product by paving the way for quick-to-market, efficient and high-quality execution. It also aligns with our values of transparency and trust within the monday.com culture.

 

Our customers

 

We have a large customer base that consists of over 225,000 customers as of December 31, 2023, an increase of 21% from the more than 186,000 customers as of December 31, 2022. Our customers span thousands of use cases and across more than 200 different industries, ranging from teams of all sizes. Since inception, we have been focused on ensuring that any user can easily adopt our platform on their own regardless of his or her technical skills. Because of our easy-to-use interface, customers across industries use our platform, with more than 70% of our customers working in traditionally non-tech industries, such as real estate, banking, journalism, and construction, alongside customers from traditionally tech industries, such as IT management, software development, and e-commerce.

 

Research and development

 

Builders

 

Our research and development (“R&D”) group, together with our product and product design groups, which we also refer to as our “builders group,” consists of autonomous, multidisciplinary teams of engineers, analysts, designers, and product managers, each with high talent density and its own product mission.

 

These small and agile teams are empowered to make independent decisions, move quickly, and are able to execute at a faster pace, launching a new version of monday.com almost every day while meeting high-quality assurance standards. Our builders group works in a closed loop of customer feedback, testing, and data to remain connected to our users to keep our product aligned with their needs.

 

We invest substantial resources in R&D to improve and scale our product. The builders group is a lean and efficient organization within monday.com with a highly significant impact on our revenue. As of December 31, 2023, we had 409 employees in our builders group.

 

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CIO Team

 

As our organization scales, we aim to centralize our efforts to help our departments streamline business processes and work more efficiently. Our CIO team, led by the Chief Information Officer, oversees the management of our main information systems and data infrastructures, in order to enable data-driven decision-making and optimize business operations. Our CIO team is comprised of several domains, such as BigBrain, data analysis and infrastructure.

 

Security

 

Our security efforts are guided and monitored by our VP Chief Information and Security Officer, as well as our dedicated global security teams, composed of six specialized domains: application security; IT security; governance, risk, and compliance; field CISO; cloud security; and data security.

 

CRO Team

 

Customers are and have always been at the core of our business. To better serve them, all our client facing teams operate as a consolidated organization, under our Chief Revenue Officer.

 

We employ a hybrid approach, combining an extensive self-serve funnel with direct sales from our partners and sales teams, then collaborating with customer success and customer experience teams.

 

This alignment ensures that from the moment a customer begins using monday.com and throughout their growth trajectory, their experience is seamless.

 

Marketing

 

As a multi-product company, we utilize our marketing efforts to expand brand awareness, grow lead generation, and strengthen relationships with both existing and potential customers.

 

In order to expand our brand awareness, we invest in organic marketing, online brand advertising, out-of-home campaigns, and are constantly testing new channels.

 

We target potential customers on the team and managerial levels with both a bottom-up and top-down marketing approach, casting a wide net of performance-based marketing, like acquisition and media-buying, across several digital and offline channels to help bring in new customers.

 

Our B2B marketing enables our client-facing teams to deliver value and impact to current and potential customers, as well as our partner ecosystem. We are focused on delivering a tailored and valuable experience to all accounts with product-specific or industry-specific offerings. Our multidisciplinary marketing approach allows us to continue expanding upmarket, deliver value to customers in over 200 industries, and bring leads ranging from small businesses to Fortune 500 companies.

 

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Sales

 

In parallel with our self-serve funnel, our account executives focus on acquiring new customers. As part of our flywheel and top-down approach, our account managers are actively monitoring customers’ usage patterns and engaging with them to expand the platform usage within their organizations to help them achieve their goals. Our sales teams specialize by region and customer size.

 

Our product suite provides us with an additional entry point into our sales flywheel. Because all products are built on top of the platform, customers can easily adopt additional products as they grow their accounts and use cases. As adoption of our products grows, we have been able to increase the footprint of monday.com across accounts.

 

Our partners

 

Our global partner ecosystem was built to extend our reach, add product value, and position monday.com and its partners as leaders in the market. Our broad ecosystem includes leading enterprise software companies and emerging startups, global systems integrators, and channel partners. As of December 31, 2023, we have 219 channel partners in more than 50 countries. With a wide array of vertical and industry expertise, our partners do more than just sell our products, they also provide professional services and extend our products with partner-led solutions and applications.

 

We have 35 partner-built solutions on the monday.com platform, across accounting, construction, HR management and other verticals. In addition, our partners built, listed, and started monetizing 67 applications on the monday. com marketplace, such as resource management, time tracking, and portfolio management.

 

Professional services provided by partners enable larger deals and demonstrate the power of our company. Our partners are uniquely situated to help potential customers implement our products. Customers can find a partner that fits their specific needs based on geographical location and desired verticals through our services marketplace and partner directory.

 

We have partnered with some of the world’s leading tech companies, such as Amazon AWS, as well as with a broad set of independent software vendors, in order to increase in scope, deepen our products, and strengthen our ability to serve as the connective layer across organizations.

 

We also hold strategic alliance agreements with global systems integrators, as well as regional partnerships. We formed these alliances in order to strengthen our ability to move up-market and work together to help customers achieve digital transformation with deep, enterprise-grade solutions built on top of our platform.

 

Customer Success

 

Our customer success teams specialize in driving value for monday.com customers by maximizing impact and adoption of use cases on the platform. Customer success augments our sales teams by ensuring that our customers fulfill their business objectives through leveraging their expertise of the platform and gathering extensive knowledge on the needs of our diverse

 

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customer base. Through their relationship-building efforts, they are able to drive long-term loyalty. They also play a key role in the flywheel sales motion, supporting account expansion.

 

Customer Experience

 

Our customer experience team provides 24/7 support to our customers. We offer support to every account and every user, with extended service to enterprise customers. All customers receive an extensive self-service knowledge base, on-demand webinars and demonstrations, and access to the monday.com community, a place to connect with thousands of monday.com users to learn and share ideas. Our extended service includes priority support and specialized onboarding services, along with additional services.

 

Our competition

 

We are creating a new category of software, the Work OS, that seeks to change the way people work and businesses operate. As a result, we compete across multiple different markets. Our competitors include the following:

 

•

companies that primarily offer project and work management solutions, including the application of processes, methods, skills, and knowledge to achieve specific objectives. This includes companies such as Asana, Inc., Smartsheet Inc., Notion Labs, Inc., Atlassian Corporation PLC (Trello), ClickUp and Freshworks Inc.

 

•

companies that primarily offer customer relationship management solutions. This includes companies such as SugarCRM, Pipedrive, and Zoho Corp.

 

•

companies that primarily offer software development tools. This includes companies such as Atlassian Corporation PLC (Jira).

 

In the future, we will likely face increased competition from companies providing similar platforms to our platform. Our principal competitive factor is our open and modular infrastructure, leading in flexibility and adaptability and our ability to scale our vertical and horizontal offerings as we continue to rapidly build end-to-end products. We believe that our ability to compete successfully depends primarily on the following factors:

 

•

Our ability to introduce new and improve on existing features, products, and services in response to competition, user sentiment, online, market and industry trends, and the ever-evolving technological landscape;

 

•

Our ability to continue to increase social and technological acceptance of our products;

 

•

Continued growth in the digitization of the workplace;

 

•

Our ability to maintain the value and reputation of monday.com as a solution; and the scale, growth, and engagement of our community relative to those of our competitors; and

 

•

The scale, growth, and engagement of our community relative to those of our competitors.

 

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Intellectual property

 

Our intellectual property is valuable and important to our business. To establish and protect our proprietary rights, including our proprietary technology, software, know-how, and brand, we rely upon a combination of patents, designs, copyright, trade secret, domain names and trademark rights, and contractual restrictions such as confidentiality agreements, licenses, and intellectual property assignment agreements. Although we take great efforts to establish and protect our proprietary rights, we believe that factors such as the technological and creative skills of our personnel, creation of new modules, features and functionality, and frequent enhancements to our platform, are more essential to establishing and maintaining our technology leadership position.

 

We have developed a patent program and a strategy to identify and apply for patents for innovative aspects of our platform and technology. As of December 31, 2023, we had 34 U.S. patent-pending applications, three U.S. provisional patent applications, 61 granted U.S. patents, nine allowed U.S. patents, two EU patent-pending applications, one allowed Israeli patent, one Israeli patent-pending application and six PCT applications relating to certain aspects of our technology.

 

We have trademark rights in our name, logo, and other brand elements, including trademark registrations for select marks in the United States and other jurisdictions around the world. We also have design registrations and applications in the United States and the European Union, as well as domain names for websites that we use. We intend to pursue additional trademark and design registration to the extent we believe it would be beneficial.

 

Legal proceedings

 

We have not been, and are not currently, a party to any material or pending litigation or regulatory proceedings that could have a material adverse effect on our business, operating results, financial condition, or cash flows. From time to time, we may be involved in legal or regulatory proceedings arising in the ordinary course of our business.

 

monday.com ESG

 

The monday.com way

 

Our culture is why we win and is more than a catchphrase or a poster on a wall. It is what we do. It is how we act. Our culture is the ‘monday.com way.’

 

Transparency and trust. Radical transparency, data accessibility, and trust allow us to reduce complexity, ensure that we are all working towards the same goal, and increase accountability and ownership. Transparency is a tool that helps us harness our collective intelligence and eliminates politics and bureaucracy.

 

Customer-centricity. We have achieved leading benchmarks for customer service, answering tickets at faster-than-industry-average response times. We prioritize customer satisfaction over our potential short-term gains, and we believe that when our customers win, we win.

 

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Product-first. We believe that a product should work for the customer and not the other way around. Every feature is designed to be intuitive and accessible, as evidenced by the fact that more than 70% of our customers work in traditionally non-tech industries.

 

Ownership and impact. We empower our employees to make their own decisions so that they can maximize their impact. We believe autonomy allows our employees to move faster, be more efficient and learn from their own mistakes.

 

Speed and execution. Speed is the key to success in everything we do. We constantly push ourselves to learn fast, gain first-mover advantage and deliver quickly. As we continue to scale, our ability to execute and adapt quickly will continue to give us a competitive edge.

 

Inclusivity. Diversity, belonging, and inclusion are rooted in the core of our company. We celebrate individuality together as a team. We have embedded inclusivity not only within the company’s values but also within the platform, providing a user experience open to everyone.

 

Privacy and security

 

We are committed to providing our customers with a highly secure and reliable environment, and to giving them peace of mind while they manage their data on the platform and products. By using top-of-the-line security tools and aligning with the strictest security and data protection measures available on the market, we meet the needs of all verticals, including those with stringent requirements such as health care and banking. We earn the trust of our customers by making data security our top priority.

 

We conduct annual red team assessments on our defensive posture, applicative penetration tests, infrastructure attack simulations, manage a private bug bounty program, and assumed breach simulations. These assessments and drills are performed and accompanied by leading industry standard offensive and defensive third-party security consulting companies, which use high-end sophisticated attack techniques to provide unique visibility into our potential security risks and vulnerabilities.

 

Our security strategy and controls are based on international standards and industry best practices, such as ISO 27001, ISO 27018, and OWASP Top 10, and are subject to independent annual SOC2 Audits. Additionally, our security strategy and controls include HIPAA-compliant features.

 

We have a dedicated privacy team that builds and executes our privacy program, which includes working with our legal teams to conduct product and feature reviews, privacy and impact assessments, and support for data protection and privacy-related requests. We monitor guidance from industry and regulatory bodies and update our product features and contractual commitments accordingly.

 

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Our facilities

 

Our current corporate headquarters are located in Tel Aviv, Israel where we lease approximately 200,000 square feet pursuant to an operating lease that is expected to expire in May 2031. We plan to expand our current headquarters by an additional 50,000 square feet by July 2024.

 

We also lease office space in New York City, Miami, Chicago, Denver, São Paulo, London, Warsaw, Sydney, Melbourne, and Tokyo. We further intend to expand our global facilities and lease additional office space as we recruit more employees and enter new geographic markets. We believe that suitable additional or alternative space will be available as needed to accommodate any such growth. We are committed to ensuring that all new buildings, even though led by third-party developers, follow sustainable principles.

 

Our offices are designed to support our work culture, as well as each location’s local culture. When designing our global offices, we create a local identity that incorporates unique aspects of each location. We promote ownership and transparency with a completely open workspace and glass-walled conference rooms. There are no private offices, without exception. All of our meeting rooms are optimized for both online and face-to-face meetings to facilitate seamless collaboration between employees globally. We also strategically place hundreds of dashboards throughout the office to encourage transparency and data-driven decision-making. In every element of our office design, we are mindful of our environmental impact. Wherever possible in our offices, we implement smart energy and waste management systems.

 

 

 

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Our workforce

 

As of December 31, 2023, we had 1,854 employees worldwide. Provided below is a breakdown of employees by region:

 

 

 

Diversity and Inclusion

 

At monday.com, we are committed to fostering a workplace culture of equity and inclusion. We value all backgrounds and beliefs and recognize that diversity is essential to our innovation, creativity, and continuous success.

 

Spearheading our diversity efforts, our sites in the United States continuously work to strategically source candidates from underrepresented backgrounds through external partnerships with leading organizations and associations focused on DEI. At our headquarters in Tel Aviv, we are taking steps to improve our representation from the Arab-Israeli community and female representation in R&D roles, with initiatives in place to help us recruit from groups that we feel are underrepresented in our workforce.

 

We have 10 Employee Resource Groups (ERGs), with the majority of them having global membership, which enable our organization to focus on inclusion through the efforts of community building. Our ERGs are open to all our employees and able to amplify the voices of the communities that they represent through education, observance, and celebration.

 

We have set goals to align our workforce, in any given office, with the demographics of the surrounding community to keep perspective and relevance. This allows us to have office-specific goals, which have been defined in our annual Environmental, Social, and Governance report. We will continuously work to maintain and improve the diversity of our workforce across all sites.

 

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Employee wellness

	We work continuously around the globe to ensure our people’s physical and mental well-being. To promote physical health, we offer medical checkups throughout the year, physical fitness classes, a full gym, sports groups, nutritionist services, and alternative medicine services. We also prioritize our employees’ mental health by offering in-office and confidential therapy sessions, free subscriptions to a meditation service, meditation rooms, and a daily mindfulness group.

  

Learning and development

	Through our learning and development programs, we work to continuously improve the performance of our workforce and invest in the career development of each employee.

  

Management workshops

	We believe that one of the best ways to retain and develop our talent is by ‘leading the leaders’. We conduct onboarding and ongoing sessions with our first-line and second-line managers to provide them with the tools they need to manage, mentor and develop their employees. The sessions also empower them to effectively deal with day-to-day managerial challenges and conflicts in order to create the best possible work environment.

 

Talent development

	We are committed to the personal and professional development of all our employees. We have several programs in place offering external learning resources tailored to each employee’s professional growth path. We offer multiple internal courses as well, including stock option education, employee knowledge sharing, and more.   An annual budget is reserved for each business unit within the Company to provide profession-specific education and training to their employees. We also have a comprehensive internal mobility program in place to empower employees to follow their interests and seek new career opportunities within monday.com.

 

Rewards program

	Our rewards program is designed to recruit and retain top talent worldwide. We offer market-competitive compensation and benefits packages in an equitable way. We assess these programs on an ongoing basis in order to maintain our competitiveness within the industry and ensure intrinsic value for all of our employees.

 

 

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The monday.com Digital Lift Initiative

Since founding monday.com, we have been committed to giving back and creating an impact. On May 21, 2021, we established the Digital Lift Initiative to further our mission of closing the digital divide between the for-profit and nonprofit sectors. Our goal is for the Digital Lift Initiative to provide nonprofits with the technology and support they need to become more efficient in their work.

 

In order to aid us in carrying out aspects of our Digital Lift Initiative, we are in the process of establishing an Israeli ‘Public Benefit’ company (“Digital Lift Foundation”). The Digital Lift Foundation will be charged with helping us carry out our social responsibility mission. The initiative is currently centered around two pillars: Digital Lift and the Emergency Response Team (ERT).

 

In order to fund the initiative, we pledged to contribute 10% of our equity to the Digital Lift Initiative. Accordingly, we reserved 2% prior to our initial public offering (“IPO”) and intend to donate the remaining 8% gradually with a cap of 1% per year.

 

We also provide every employee with the opportunity to volunteer 1% of their paid work time to any approved charitable or community initiative. In 2023 our employees volunteered over 4,000 hours supporting nonprofit organizations.

 

Our impact

 

We design, build, and deploy solutions with monday.com to solve the world’s most pressing challenges. We partner with nonprofits around the world to make this happen, by working with team members within the organization to help them adopt the platform and build a solution for their use case.

 

Health Emergency Monitoring with WHO Foundation 

The WHO Foundation mobilizes private capital with the goal of achieving health equity for all. Since its inception, the WHO foundation has raised approximately $100 million, most of which have supported WHO’s response to health emergencies. The Digital Lift Initiative supported the WHO Foundation with building a project management system to prioritize such emergencies around the world and streamline the activation of fundraising campaigns.

 

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Organizational structure

 

The legal name of our company is monday.com Ltd., and we are organized under the laws of the State of Israel.

 

The following table sets forth our key subsidiaries, all of which are 100% owned directly by monday.com Ltd.:

 

Name of subsidiary	Place of incorporation
monday.com Inc.	Delaware, United States
monday.com Pty Ltd.	Australia
monday.com UK 2020 Ltd.	United Kingdom
monday.com Ltda.	Brazil
monday.com K.K.	Japan
monday.com SP. Z O.O.	Poland
monday.com PTE. LTD.	Singapore

 

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Part 2 - Directors and Senior Management

 

The following table sets forth the name and position of each of our executive officers and directors as of the date of this annual report:

 

Name	Age	Position
Executive Officers and Employee Directors:
Roy Mann(1)	45	Co-Founder, Co-Chief Executive Officer, Director
Eran Zinman	40	Co-Founder, Co-Chief Executive Officer, Director
Eliran Glazer	52	Chief Financial Officer
Daniel Lereya	39	Chief Product and Technology Officer
Yoni Osherov	46	Chief Revenue Officer
Shiran Nawi	40	Chief People and Legal Officer
Non-Employee Directors
Jeff Horing	60	Independent Director, Chairperson of the Board of Directors
Aviad Eyal(1)(2)	53	Independent Director
Avishai Abrahami	52	Independent Director
Gili Iohan(2)	48	Independent Director
Ronen Faier(1)(2)	53	Independent Director

 

(1)

Serves as a member of our environmental, social and governance committee.

 

(2)

Serves as a member of our audit committee, compensation committee, and nominating committee.

 

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Executive officers

 

	Roy Mann is our Co-Founder and has served as our Co- Chief Executive Officer since June 1, 2012. Mr. Mann has also served as a member of our board of directors since February 2012. Mr. Mann previously served as a senior technology leader at Wix.com Ltd. (Nasdaq: WIX), from 2010 to 2012. Mr.Mann is also the Co-Founder of and led the technology vision and operation at SaveAnAlien.com, from 2006 to 2010. Mr. Mann holds a B.A. in Computer Science from the Interdisciplinary Center Herzliya, Israel.

 

	Eran Zinman is our Co-Founder and has served as our Co-Chief Executive Officer since November 2020 after having served as our Chief Technology Officer between 2012 and 2020. Mr. Zinman has also served as a member of our board of directors since March 2018. Mr. Zinman previously served as the Research and Development Manager at the founding team of Conduit Mobile (now Como) at Conduit Ltd. from 2010 to 2012. Mr. Zinman is the Co-Founder of Othersay and served as its Chief Executive Officer from 2009 to 2010. Mr. Zinman holds a B.Sc. in Computer Science and Electrical Engineering from Tel Aviv University, Israel.

 

	Eliran Glazer has served as our Chief Financial Officer since March 2021. Mr. Glazer previously served as the Chief Financial Officer of Lightricks Ltd. from December 2019 to February 2021 and the Chief Financial Officer of Nex Markets from April 2012 to November 2018, following the acquisition of Nex Markets by the CME Group, Mr. Glazer served as the Chief Financial Officer of Nex Markets, a CME Group Company from November 2018 to November 2019. Mr. Glazer holds a B.A. in Business and Accounting from The College of Management Academic Studies as well as an L.L.M. from Bar Ilan University and is a licensed certified public accountant.

 

	Daniel Lereya has served as our Chief Product and Technology Officer since 2023 and previously served as our Vice President of Research and Development since October 2016 and Vice President of Product since December 2020. Mr. Lereya previously served in numerous positions, including as a software team leader at International Business Machines Corp. (NYSE: IBM) from November 2012 to October 2016, and as a software engineer at SAP SE from February 2011 to October 2012. Mr. Lereya holds a B.Sc. in Computer Science and Economics from Tel Aviv University, Israel.

 

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FY2023 20-F

 

	Yoni Osherov has served as our Chief Revenue Officer since November 2022 and had previously served as our Vice President of Global Sales and Marketing since August 2017. Mr. Osherov previously served as a member of the board of directors of Biz-Effective Ltd. (DBA as Centrical) from 2016 to 2017. Mr. Osherov has served in numerous positions at Verint Systems Ltd., including as the Vice President of Product Strategy from 2014 to 2017 and as the Vice President of Customer Analytics from 2013 to 2014. Mr. Osherov was the owner of Tavo.co.il, which was acquired by Zap Group Ltd. in 2012. Mr. Osherov holds a B.A. in Business Administration from the College of Management Academic Studies, Israel.

 

	Shiran Nawi has served as our Chief People and Legal Officer since 2023 and previously served as our General Counsel since June 2018. Prior to joining monday.com Ms. Nawi served as a senior legal counsel at Wix.com Ltd. (Nasdaq: WIX) from June 2014 to June 2018 and as an associate at Israeli, Ben-Zvi, Attorneys at Law, from July 2009 to April 2014. Ms. Nawi holds an L.L.B. and a Master of Business Taxation from The College of Management Academic Studies, Israel, and is a member of the Israel Bar Association.

 

Directors

 

	Jeff Horing has served as a member of our board of directors since May 20, 2017. Mr. Horing has been a Managing Director of Insight Partners, a private equity investment firm he co-founded, since 1995. Since September 2014, Mr. Horing has served on the board of directors of Alteryx, Inc. (NYSE: AYX.), a software company. Mr. Horing has served on the board of directors of nCino, Inc. (Nasdaq: NCNO), a financial technology company, since February 2015, and of WalkMe Ltd. (NYSE:WKME) since December 2015. In addition, Mr. Horing currently serves on the board of directors of several privately held companies. Mr. Horing holds a B.S. and B.A. from the University of Pennsylvania’s Moore School of Engineering and the Wharton School, respectively, and an M.B.A. from the M.I.T. Sloan School of Management.

 

	Aviad Eyal has served as an independent director on our board of directors since June 2014. Mr. Eyal is the Co-Founder of Entrée Capital and has served as its Managing Partner since 2011. Prior to that, Mr. Eyal co-founded and built a number of successful startups over a span of 18 years. Mr. Eyal currently serves on the board of directors of several privately held companies, including Broadlume Inc. since 2019, BlueWhite Robotics Ltd. since 2019 and Rivery Ltd. since 2021. He has also served on the board of directors of Prospa Group Ltd. (ASX:PGL) since 2017. Mr. Eyal holds a B.Sc. Engineering degree from the University of Natal, South Africa. Mr. Eyal was selected to the Forbes Europe Midas list of top 25 VCs for the past five years.

 

Part 2 - Directors and Senior Management 46

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	Avishai Abrahami has served as an independent director on our board of directors since October 24, 2012. Mr. Abrahami is the Co-Founder of Wix.com Ltd. (Nasdaq: WIX) and has served as its Chief Executive Officer since September 2010, prior to which he served as its Co-Chief Executive Officer, and as a member of its board of directors since October 2006. From May 2016 to November 2017, Mr. Abrahami served as a member of the board of directors of SodaStream International Ltd. (acquired by PepsiCo Inc.). From 2004 to 2006, Mr. Abrahami was the Vice President of Strategic Alliances at Arel Communications & Software Ltd., a private Israeli company specializing in communication technology. In 1998, he co-founded Sphera Corporation, a private company that develops software for managing data centers, and he served as its Chief Technology Officer from 1998 until 2000 and Vice President of Product Marketing from 2000 until 2003. In 1993, he co-founded AIT Ltd., a private Israeli software company, and served as its Chief Technology Officer until it was acquired in 1997. Mr. Abrahami served in the Israeli Defense Forces’ elite computer intelligence unit from 1990 until 1992.

 

	Gili Iohan has served as an independent director on our board of directors since June 9, 2021. Since 2018, Ms. Iohan has been a partner at ION Crossover Partners, an Israeli-based cross-over fund. Ms. Iohan currently serves on the board of directors of Varonis Systems, Inc. (Nasdaq: VRNS), Fiverr International Ltd. (Nasdaq: FVRR), and SimilarWeb Ltd. (NYSE: SMWB), as well as Aqua Security Ltd. and Lusha Ltd. Ms. Iohan holds a B.A. in Accounting and Economics and an M.B.A. from Tel Aviv University and is a licensed certified public accountant.

 

	Ronen Faier has served as an independent director on our board of directors since June 9, 2021. Mr. Faier has served as the Chief Financial Officer of SolarEdge Technologies Inc. (Nasdaq: SEDG) since January 2011. Previously, Mr. Faier served as the Chief Financial Officer of Modu Ltd. from 2008 through December 2010 and as the Chief Financial Officer of M-Systems Ltd., which was acquired by SanDisk Corp. (a Western Digital Corp. (Nasdaq: WDC) company). Mr. Faier has served on the board of directors of Kaltura Inc. (Nasdaq: KLTR) since July 2021 and Cato Networks Ltd. (NYSE: CATO). Mr. Faier holds a B.A. in accounting and economics from the Hebrew University in Jerusalem and an M.B.A. from Tel Aviv University and is a licensed certified public accountant.

 

Part 2 - Directors and Senior Management 47

FY2023 20-F

 

Part 3 - Major Shareholders and Related Party Transactions

 

Major shareholders

 

The following table sets forth information with respect to the beneficial ownership of our shares as of December 31, 2023, by:

 

•

each person or entity known by us to own beneficially more than 5% of our outstanding shares;

 

•

each of our directors and executive officers individually; and

 

•

all of our executive officers and directors as a group.

 

The beneficial ownership of ordinary shares is determined in accordance with the SEC rules and generally includes any ordinary shares over which a person exercises sole or shared voting or investment power. For purposes of the table below, we deem shares subject to options that are currently exercisable or exercisable within 60 days of December 31, 2023, and RSUs that shall vest within 60 days of December 31, 2023, to be outstanding and to be beneficially owned by the person holding the options or RSUs for the purposes of computing the percentage ownership of that person but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. The percentage of shares beneficially owned is based on 48,923,903 ordinary shares outstanding as of December 31, 2023.

 

As of December 31, 2023, we had 20 holders of record of our ordinary shares in the United States, including Cede & Co., the nominee of The Depository Trust Company. These shareholders held in the aggregate 43,490,916 of our outstanding ordinary shares, or approximately 89% of our outstanding ordinary shares as of December 31, 2023. The number of record holders in the United States is not representative of the number of beneficial holders nor is it representative of where such beneficial holders are resident since many of these ordinary shares were held by brokers or other nominees.

 

All of our shareholders, including the shareholders listed below, have the same voting rights attached to their ordinary shares. See “Part 7 - Additional Information - Memorandum and Articles of Association.” None of our principal shareholders or our directors and senior management have different or special voting rights with respect to their ordinary shares. Unless otherwise noted below, each shareholder’s address is monday.com Ltd., 6 Yitzhak Sadeh Street, Tel Aviv, 6777506 Israel. A description of any material relationship that our principal shareholders have had with us or any of our predecessors or affiliates since January 1, 2021 is included under “Related Party Transactions.”

 

Part 3 - Major Shareholders and Related Party Transactions  48

FY2023 20-F

 

Shares Beneficially Owned
Name of Beneficial Owner	Number	%
Principal Shareholders
Sonnipe Limited(1)	4,157,868	8.5
T. Rowe Price Associates(2)	3,133,262	6.4
Directors and Executive Officers
Roy Mann(3)	5,481,890	11.2
Eran Zinman(4)	2,148,070	4.4
Eliran Glazer(5)	30,055	*
Daniel Lereya(6)	96,750	*
Yoni Osherov(7)	71,695	*
Shiran Nawi(8)	46,188	*
Avishai Abrahami(9)	497,458	1.0
Aviad Eyal(10)	247,370	*
Jeff Horing(11)	3,142	*
Ronen Faier(12)	2,574	*
Gili Iohan(13)	2,574	*
All executive officers and directors as a group (11 persons)	8,627,766	17.6

 

* Indicates ownership of less than 1%.

 

(1)

Based on the Schedule 13G filed by Sonnipe Limited. with the SEC on February 13, 2024, includes: 4,157,868 ordinary shares held of record by Sonnipe Limited.

 

(2)

Based on the schedule 13G filed by T.Rowe Price Associates Inc. with the SEC on February 14, 2024, includes: 3,133,262 ordinary shares held of record by T.Rowe Price Associates Inc.

 

(3)

Consists of (i) 5,448,637 ordinary shares held of record by Roy Mann, (ii) 32,025 ordinary shares subject to options held by Roy Mann that are exercisable within 60 days of December 31, 2023, and (iii) 1,228 RSUs held by Roy Mann that vest within 60 days of December 31, 2023.

 

(4)

Consists of (i) 2,114,817 ordinary shares held of record by Eran Zinman, (ii) 32,025 ordinary shares subject to options held by Eran Zinman that are exercisable within 60 days of December 31, 2023, and (iii) 1,228 RSUs held by Eran Zinman that vest within 60 days of December 31, 2023.

 

Part 3 - Major Shareholders and Related Party Transactions  49

FY2023 20-F

 

(5)

Consists of (i) 3,942 ordinary shares held of record by Eliran Glazer, (ii) 25,191 ordinary shares subject to options held by Eliran Glazer that are exercisable within 60 days of December 31, 2023 and (iii) 922 RSUs held by Eliran Glazer that vest within 60 days of December 31, 2023.

 

(6)

Consists of (i) 3,157 ordinary shares held of record by Daniel Lereya, (ii) 92,933 ordinary shares subject to options held by Daniel Lereya that are exercisable within 60 days of December 31, 2023 and (iii) 660 RSUs held by Daniel Lereya that vest within 60 days of December 31, 2023.

 

(7)

Consists of (i) 3,651 ordinary shares held of record by Yoni Osherov, (ii) 67,219 ordinary shares subject to options held by Yoni Osherov that are exercisable within 60 days of December 31, 2023 and (iii) 825 RSUs held by Yoni Osherov that vest within 60 days of December 31, 2023.

 

(8)

Consists of (i) 2,294 ordinary shares held of record by Shiran Nawi, (ii) 43,391 ordinary shares subject to options held by Shiran Nawi that are exercisable within 60 days of December 31, 2023 and (iii) 503 RSUs held by Shiran Nawi that vest within 60 days of December 31, 2023.

 

(9)

Consists of (i) 297,845 ordinary shares held of record by Avishai Abrahami, (ii) 99,500 ordinary shares subject to options held by Avishai Abrahami that are exercisable within 60 days of December 31, 2023, (iii) 113 RSUs held by Avishai Abrahami that vest within 60 days of December 31, 2023 and (iv) 100,000 ordinary shares held of record by Wix.com Ltd. Mr. Abrahami is the Chief Executive Officer and Co-Founder of Wix.com Ltd. and may therefore be deemed to be the indirect beneficial owner of the ordinary shares owned directly by Wix.com Ltd.

 

(10)

Consists of (i) 247,257 ordinary shares held of record by Aviad Eyal and (ii) 113 RSUs held by Aviad Eyal that vest within 60 days of December 31, 2023.

 

(11)

Consists of (i) 2,971 ordinary shares held of record by Jeff Horing and (ii) 171 RSUs held by Jeff Horing that vest within 60 days of December 31, 2023.

 

(12)

Consists of (i) 2,461 ordinary shares held of record by Ronen Faier and (ii) 113 RSUs held by Ronen Faier that vest within 60 days of December 31, 2023.

 

(13)

Consists of (i) 2,461 ordinary shares held of record by Gili Iohan and (ii) 113 RSUs held by Gili Iohan that vest within 60 days of December 31, 2023.

 

As of December 31, 2023, Insight Partners, which previously beneficially owned approximately 28.7% of our ordinary shares, no longer held more than 5% of our ordinary shares.

 

Related Party Transactions

 

Our policy is to enter into transactions with related parties on terms that, on the whole, are no more or less favorable than those available from unaffiliated third parties. Based on our experience in the business sectors in which we operate and the terms of our transactions with unaffiliated third parties, we believe that all of the transactions described below met this policy standard at the time they occurred.

 

Part 3 - Major Shareholders and Related Party Transactions  50

FY2023 20-F

 

The following is a description of our material-related party transactions since January 1, 2021.

 

Agreements with Directors and Officers

 

Employment and Related Agreements

We have entered into written employment agreements with each of our officers. These agreements provide for notice periods of varying duration for termination of the agreement by us or by the relevant executive officer, during which time the officer will continue to receive base salary and benefits. These agreements also contain customary provisions regarding confidentiality of information and ownership of inventions.

 

Equity Awards

Since our inception we have granted options to purchase, and RSUs underlying, our ordinary shares to our officers and certain of our directors. Such award agreements contain acceleration provisions upon certain merger, acquisition, or change of control transactions. We describe our option plans under “Part 7 - Additional Information - Compensation—Employment agreements with executive officers and directors” and the equity-based compensation received by certain of our senior managers in “Part 7 - Additional Information - Compensation — Compensation of Directors and Executive Officers.” If the relationship between us and an officer, or a director, is terminated, except for cause (as defined in the various option plan agreements), all options that are vested will remain exercisable for three months after such termination.

 

Exculpation, Indemnification and Insurance 

Our articles of association permit us to exculpate, indemnify and insure certain of our office holders to the fullest extent permitted by Israeli law. We have entered into agreements with certain of our office holders, including our directors, exculpating them from a breach of their duty of care to us to the fullest extent permitted by law and undertaking to indemnify them to the fullest extent permitted by law, subject to certain exceptions, including with respect to liabilities resulting from our initial public offering to the extent that these liabilities are not covered by insurance. See “Part 7 - Additional Information - Compensation—Employment agreements with executive officers and directors — Exculpation, Indemnification, and Insurance.”

 

Investors’ Rights Agreement

We are party to an amended and restated investors’ rights agreement, dated as of June 21, 2019, as amended on April 27, 2021 and June 10, 2021 (“Investors’ Rights Agreement”). The Investors’ Rights Agreement will provide, among other things, that certain holders of our ordinary shares, including Roy Mann and Sonnipe Limited, each of which holds more than 5% of our outstanding ordinary shares have the right to demand that we file a registration statement or request that their shares be covered by a registration statement that we are otherwise filing. For a description of these registration rights, see Exhibit 2.2 “Description of Securities — Registration Rights.”

 

Part 3 - Major Shareholders and Related Party Transactions  51

FY2023 20-F

 

Part 4 - Operating and Financial Review and Prospects

 

You should read the following discussion together with the consolidated financial statements and related notes included elsewhere in this annual report. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Part 6 - Risk Factors” and “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.

 

monday.com FY-23 overview in numbers

 

 

(1)

Annualized revenue run rate is calculated as our Q4, 2023 revenue multiplied by four.

 

(2)

For definition of ARR and Net Dollar Retention see “Part 4 - Operating and Financial Review and Prospects - Key Business Metrics”.

 

Part 4 - Operating and Financial Review and Prospects  52

FY2023 20-F

 

Hyper-growth at scale

We have experienced rapid growth since we launched our product in 2014.

 

•

Revenue: Our revenue was $729.7 million, $519.0 million, and $308.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

 

•

Year over Year Revenue Growth: An increase of 41%, 68%, and 91% in the years ended December 31, 2023, 2022 and 2021, respectively.

 

•

Net Loss: Our net loss was $1.9 million, $136.9 million, and $129.3 million for the years ended December 31, 2023, 2022 and 2021, respectively.

 

•

Net Cash Provided by Operating Activities: Our net cash provided by operating activities was $215.4 million, $27.1 million and $16.4 million in the years ended December 31, 2023, 2022 and 2021, respectively.

 

•

Adjusted Free Cash Flow: Our adjusted free cash flow was $204.9 million, $8.1 million and $9.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

 

Key Business Metrics

We believe that our growth and financial performance are dependent upon many factors, including the key factors described below.

 

A Large and Diversified Customer Base

We are focused on continuing to grow the number of customers that use our platform. Our operating results and growth opportunities depend, in part, on our ability to attract new customers, and expand existing customers. We believe we have significant greenfield opportunities among addressable customers worldwide and we will continue to invest in our research and development to differentiate our platform from competitive products and services. We will also continue to invest in our sales and marketing to help us take advantage of this opportunity. To this extent, we are making significant investments in our sales and marketing efforts, including investment and expansion of our CRO teams.

 

As of December 31, 2023, we had over 225,000 paying customers, compared to over 186,000 as of December 31, 2022. We define “customer” to mean a unique web domain-based account that is on a paid subscription plan, which could include an organization, educational or government institution, or distinct business unit of an organization. With over 225,000 customers, we are not reliant on any specific customer, as no single customer accounts for more than 1% of our revenues, and our top 100 customers accounted for less than 10% of our revenues for the years ended December 31, 2023 and 2022.

 

We see a significant opportunity to continue to add customers as we further develop our sales and marketing efforts and scale our platform, as well as add new products.

 

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FY2023 20-F

 

Strong base of Customers with more than 10 users

 

We distinguish customers with more than 10 users from our broader customer base. They are the core focus of our sales and marketing efforts, and the ARR (defined below) growth rate of our customers with more than 10 users, which include enterprise and non-enterprise customers, has outpaced the rest of the business in each of our previous fiscal years. As of December 31, 2023, 2022 and 2021, our customers with more than 10 users accounted for 78%, 76% and 72% of our ARR (“Annual Recurring Revenue”), respectively. “Annual Recurring Revenue” or “ARR” is defined to mean, as of the measurement date, the annualized value of our customer subscriptions plan assuming that any contract that expires during the next 12 months is renewed on its existing terms.

 

We believe these measures illustrate the improvements we have made to our platform to increase the value we deliver to our customers over time. We expect the percentage of ARR attributable to customers with more than 10 users to remain at similar levels.

 

 

Consistent Growth of Enterprise Customers

 

Our ability to successfully move upmarket is demonstrated by the consistent growth in the number of our enterprise customers. We grew the number of enterprise customers on our platform, which we define as customers with more than $50,000 in ARR by 56% during 2023, from 1,474 customers as of December 31, 2022 to 2,295 customers as of December 31, 2023, and by 86% during 2022, from 793 customers as of December 31, 2021. The ARR from such enterprise customers grew by 59% from 2022 to 2023 and by 99% from 2021 to 2022, outpacing our overall ARR growth as a company.

 

Customers with more than $100,000 in ARR grew by 58% during 2023, from 527 customers as of December 31, 2022 to 833 customers as of December 31, 2023, and by 97% during 2022, from 267 customers as of December 31, 2021. The ARR from such enterprise customers grew by 63% from 2022 to 2023 and by 112% from 2021 to 2022.

 

Part 4 - Operating and Financial Review and Prospects  54

FY2023 20-F

 

Net Dollar Retention Rate

 

We expect to derive a significant portion of our revenue growth from expansion within our customer base, where we have an opportunity to expand adoption of the Work OS products across teams, departments, and organizations. We believe that our dollar-based net retention rate (“Net Dollar Retention Rate”) demonstrates our opportunity to further expand within our customer base, particularly those that generate higher levels of annual revenues.

 

We calculate Net Dollar Retention Rate as of a period end by starting with the ARR from customers as of the 12 months prior to such period end (“Prior Period ARR”). We then calculate the ARR from these customers as of the current period end (“Current Period ARR”). The calculation of Current Period ARR includes any upsells, contraction and attrition. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the Net Dollar Retention Rate. For the trailing 12-month calculation, we take a weighted average of this calculation of our quarterly Net Dollar Retention Rate for the four quarters ending with the most recent quarter. Our Net Dollar Retention Rate may fluctuate due to a number of factors, including the level of penetration within our customer base, expansion of products and features and our ability to retain our customers.

 

Our Net Dollar Retention Rate for customers with more than 10 users was 115% for the three months ended December 31, 2023, over 130% for the three months ended December 31, 2022, and over 135% for the three months ended December 31, 2021. We believe that the slight slowdown in Net Dollar Retention Rate is related to a slowdown in expansion of existing customers. We see a very healthy traffic of new customers, however, macroeconomic factors are leading to slower expansion in some existing customers. We currently anticipate our Net Dollar Retention to begin to recover in the second half of 2024. Customers with more than 10 users are the core focus of our sales and marketing efforts; therefore, their Net Dollar Retention is a key metric we measure. Additionally, our Net Dollar Retention rate for all of our customers was 110% for the three months ended December 31, 2023 and over 120% for the three months ended December 31, 2022 and 2021.

 

 

Part 4 - Operating and Financial Review and Prospects  55

FY2023 20-F

 

A. Operating Results

 

Components of Results of Operations

 

The following briefly describes the components of revenue and expenses as presented in our consolidated statements of operations.

 

Revenue

 

We derive revenue mainly from monthly or annual subscription agreements with our customers for access to our cloud-based Work OS platform. Our customers do not have the ability to take possession of our software.

 

Cost of Revenue

 

Cost of revenue consists of merchant and credit card processing fees, hosting fees, amortization of capitalized software development costs, subcontractor costs, salaries and related expenses, share-based compensation, software license fees, and allocated overhead costs.

 

Gross Profit and Gross Margin

 

Gross profit, or revenue less cost of revenues, and gross margin, or gross profit as a percentage of revenue, has been, and will continue to be, affected by various factors, including the timing of our acquisition of new customers, renewals of and follow-on sales to existing customers, costs associated with operating our cloud-based platform, and the extent to which we expand our operations and customer support organizations. We expect our gross margin to remain relatively consistent over the long term.

 

Operating Expenses

 

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Sales and marketing expenses are the most significant component of our operating expenses and consist of marketing and advertising expenses and commission paid to our partners. In addition, personnel-related expenses are a substantial component of our operating expenses and consist of salaries, benefits, and share-based compensation expenses. Operating expenses also include an allocation of overhead costs for facilities and shared IT-related expenses, including depreciation expenses.

 

Research and Development Expenses

 

Research and development expenses include salaries and related expenses, share-based compensation, subcontractor costs and allocated overhead costs.

 

As we continue to focus our research and development efforts on enhancing our Work OS and building new products, we expect our research and development expenses to increase in absolute dollar amounts and remain at the same level as a percentage of revenue. We foresee that such investment in research and development will contribute to our long-term growth but will also negatively impact our short-term profitability.

 

Part 4 - Operating and Financial Review and Prospects 56

FY2023 20-F

 

For the years ended December 31, 2023, 2022 and 2021, our research and development expenses as a percentage of revenue were approximately 21%, 24% and 24%, respectively.

 

Sales and Marketing Expenses

 

Sales and marketing expenses consist primarily of compensation expenses for our employees, including share-based compensation, online and offline marketing and advertising expenses, channel partners’ commissions and allocated overhead costs.

 

Our channel partners’ commissions as a percentage of revenue were approximately 6% for the year ended December 31, 2023 and 5% for each of the years ended December 31, 2022 and 2021. For the years ended December 31, 2023, 2022 and 2021, our sales and marketing expenses as a percentage of revenue were approximately 60%, 76% and 87%, respectively.

 

We expect our sales and marketing expenses will increase in absolute dollar amounts, as we plan to expand our sales and marketing efforts globally, through personnel, online and offline marketing efforts and brand awareness. In the long-term, as our business scales through customer expansion and market awareness, we anticipate that sales and marketing expenses as a percentage of total revenue will continue to decline.

 

General and Administrative Expenses

 

General and administrative expenses consist of salaries and related expenses, share-based compensation, professional service fees and allocated overhead costs.

 

We expect our general and administrative expenses to increase in absolute dollars as we continue to grow and expand our operations and operate as a public company. In the long-term, we expect that general and administrative expenses as a percent of total revenue will remain at approximately the same level. For the years ended December 31, 2023, 2022 and 2021, our general and administrative expenses as a percentage of revenue were approximately 13%, 16% and 17%, respectively.

 

Financial Income (Expense), net

 

Financial income (expense), net, consists primarily of interest generated by our money market funds and foreign exchange gains and losses, offset by bank charges and interest expenses.

 

Income Tax Expenses

 

Income tax expenses consist primarily of income tax related to foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on deferred tax assets because we have concluded that it is not more likely than not that the deferred tax assets will be realized.

 

Part 4 - Operating and Financial Review and Prospects 57

FY2023 20-F

 

Comparison of Period-to-Period Results of Operations

 

 

 

The following tables set forth the consolidated statements of operations in U.S. dollars and as a percentage of revenue for the period presented.

 

		Year ended December 31,
		2023				2022				2021
		(in thousands)
Revenue		$	729,695			$	519,029			$	308,150
Cost of revenue (1)			80,645				66,528				39,013
Gross profit			649,050				452,501				269,137
Operating Expenses:
Research and development (1)			156,500				127,047				73,686
Sales and marketing (1)			438,402				392,068				268,083
General and administrative (1)			92,733				85,401				53,493
Total operating expenses			687,635				604,516				395,262
Operating loss			(38,585	)			(152,015	)			(126,125	)
Financial income (expense), net			41,911				22,554				(838	)
Income (loss) before income taxes			3,326				(129,461	)			(126,963	)
Income tax expenses			(5,203	)			(7,406	)			(2,331	)
Net loss		$	(1,877	)		$	(136,867	)		$	(129,294	)

 

Part 4 - Operating and Financial Review and Prospects 58

FY2023 20-F

 

(1)

Includes share-based compensation expense as follows:

 

		Year ended December 31,
		2023				2022				2021
		(in thousands)
Cost of revenue		$	6,307			$	10,406			$	7,681
Research and development			38,737				32,957				21,779
Sales and marketing			25,395				33,457				23,135
General and administrative			29,747				28,100				20,934
Total share-based compensation expense		$	100,186			$	104,920			$	73,529

 

		Year ended December 31,
		2023				2022				2021
Revenue			100	%			100	%			100	%
Cost of revenue			11				13				13
Gross profit			89				87				87
Operating Expenses:
Research and development			21				24				24
Sales and marketing			60				76				87
General and administrative			13				16				17
Total operating expenses			94				116				128
Operating loss			(5)				(29)				(41)
Financial income (expense), net			6				4				(0)
Income (loss) before income tax			1				(25	)			(41)
Income tax expenses			(1)				(1)				(1)
Net loss			0	%			(26)	%			(42)	%

 

Part 4 - Operating and Financial Review and Prospects 59

FY2023 20-F

 

Comparison of the Years Ended December 31, 2023 and 2022

 

Revenue

 

				Year ended December 31,
				2023				2022				$ Change				% Change
				(in thousands)
Revenues			$	729,695			$	519,029			$	210,666				41	%

 

Revenue was $729.7 million for the year ended December 31, 2023, an increase of $210.7 million, or 41%, compared to $519.0 million for the year ended December 31, 2022. This increase was driven primarily by addition of new customers and revenues generated from our existing customers expanding their use of our solutions, as reflected by our dollar-based net retention rate of 110% as of December 31, 2023.

 

Cost of Revenue and Gross Profit

 

		Year ended December 31,
		2023				2022				$ Change				% Change
		(in thousands)
Cost of revenue		$	80,645			$	66,528			$	14,117				21	%
Gross profit			89	%			87	%

 

Cost of revenue was $80.6 million for the year ended December 31, 2023, an increase of $14.1 million, or 21%, compared to $66.5 million for the year ended December 31, 2022. This increase is directly related to the growth and scale of our business and was primarily driven by an increase of $2.5 million in salaries and related expenses, an increase of $3.2 million in indirect taxes, an increase of $3.0 million in hosting expenses, an increase of $2.2 million in processing fees, an increase of $4.0 million in third party consulting costs, an increase in allocated overhead costs of $2.4 million as a result of increased overall costs to support our business growth and related infrastructure, and an increase of $1.1 million in amortization of capitalized software costs, partially offset by a decrease of $4.1 million in share-based compensation expenses.

 

Operating Expenses

 

		Year ended December 31,
		2023				2022				$ Change				% Change
		(in thousands)
Research and development		$	156,500			$	127,047			$	29,453				23	%
Sales and marketing			438,402				392,068				46,334				12	%
General and administrative			92,733				85,401				7,332				9	%
Total operating expenses		$	687,635			$	604,516			$	83,119				14	%

 

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Research and Development Expenses

 

Research and development expenses were $156.5 million for the year ended December 31, 2023, an increase of $29.5 million, or 23%, compared to $127.0 million for the year ended December 31, 2022. This increase is directly related to the growth and scale of our business and was primarily driven by an increase of $18.9 million in salaries and related expenses, an increase of $5.8 million in share-based compensation expenses, due to an increase in the number of employees, and an increase of $0.8 million in allocated overhead costs as a result of increased overall costs to support our business growth and related infrastructure, an increase of $2.3 million in software costs and a $1.6 million increase in hosting costs.

 

Sales and Marketing Expenses

 

Sales and marketing expenses were $438.4 million for the year ended December 31, 2023, an increase of $46.3 million, or 12%, compared to $392.1 million for the year ended December 31, 2022. This increase is directly related to the growth and scale of our business and was primarily driven by an increase of $11.7 million in salaries and related expenses due to an increase in the number of employees, an increase of $21.8 million in marketing, advertising and brand costs, an increase of $14.1 million in partners commission expenses and an increase of $6.5 million in allocated overhead costs to support our business growth and related infrastructure, partially offset by a decrease of $8.1 million in share-based compensation expenses.

 

General and Administrative Expenses

 

General and administrative expenses were $92.7 million for the year ended December 31, 2023, an increase of $7.3 million, or 9%, compared to $85.4 million for the year ended December 31, 2022. This increase is directly related to the growth and scale of our business and was primarily driven by an increase of $5.4 million in salaries and related expenses, an increase of $5.0 million in rent and related expenses mainly due to our global office expansion, an increase of $1.6 million in share-based compensation expenses, an increase of $2.6 million in welfare, an increase of $2.0 million in depreciation, and an increase of $0.5 million in software expenses, partially offset by a decrease of $9.7 million in overhead allocation.

 

Financial Income (Expense), Net

 

		Year ended December 31,
		2023				2022				$ Change				% Change
		(in thousands)
Financial income (expense), net		$	41,911			$	22,554		$		19,357				86	%

 

 

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Financial income (expense), net, was an income of $41.9 million for the year ended December 31, 2023, an increase of $19.4 million or 86%, compared to income of $22.6 million for the year ended December 31, 2022. This increase in income was partially driven by global macroeconomic trends, such as higher interest on our money market funds of $23.3 million, partially offset by less foreign currency gains.

 

Income Tax Expenses

 

		Year ended December 31,
		2023				2022				$ Change				% Change
		(in thousands)
Income Tax Expenses		$	5,203			$	7,406		$		(2,203	)			(30	%)

 

Income tax expenses were $5.2 million for the year ended December 31, 2023, a decrease of $2.2 million, or 30%, compared to $7.4 million for the year ended December 31, 2022. The decrease was primarily driven by tax benefits related to share-based compensation.

 

For a comparison of the years ended December 31, 2022 and 2021, please see our Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on March 14, 2023.

 

Non-GAAP Financial Measures

 

We regularly review several financial measures, including non-GAAP operating income (loss) and adjusted free cash flow, to evaluate our business, measure our performance, identify trends in our business, prepare financial forecasts and make strategic decisions. We believe these non-GAAP financial measures are useful in evaluating our performance in addition to our financial results prepared in accordance with GAAP. You should read these non-GAAP measures in conjunction with the discussion of our GAAP results of operations and together with our consolidated financial statements and related notes included elsewhere in this annual report.

 

Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as substitutes for financial information presented under GAAP. For example, other companies in our industry may calculate these non-GAAP financial measures differently or may use other measures to evaluate their performance. Investors are encouraged to review the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and to not rely on any single financial measure to evaluate our business.

 

The following table sets forth our non-GAAP operating income (loss) and adjusted free cash flow for the years ended December 31, 2023, 2022 and 2021:

 

 

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FY2023 20-F

 

		Year ended December 31,
		2023				2022				2021
		(in thousands)
Non-GAAP operating income (loss)		$	61,601			$	(47,095	)		$	(52,596	)
Adjusted free cash flow		$	204,945			$	8,137			$	9,900

 

Non-GAAP Operating income (loss)

 

We define non-GAAP operating income (loss) as GAAP operating loss, adjusted for certain non-cash items such as share-based compensation expenses. We exclude these items because these are non-cash expenses, which we do not consider indicative of performance. In addition, management uses non-GAAP operating income (loss) to evaluate our financial performance and for planning and forecasting purposes. Non-GAAP operating income (loss) should not be considered as an alternative to GAAP operating loss or net loss as an indicator of operating performance. The following table provides a reconciliation of non-GAAP operating income (loss) to GAAP operating loss for the periods indicated:

 

		Year ended December 31,
		2023				2022				2021
		(in thousands)
Operating loss			(38,585	)			(152,015	)			(126,125	)
Share-based compensation expenses		$	100,186			$	104,920			$	73,529
Non-GAAP operating income (loss)		$	61,601			$	(47,095	)		$	(52,596	)

 

Adjusted Free Cash Flow

 

We define adjusted free cash flow as net cash provided by operating activities less cash used for purchases of property and equipment and capitalized software development costs, plus non-recurring expenditures, such as the purchase of property and equipment related to build-out of our new corporate headquarters.

 

We believe that adjusted free cash flow is a useful indicator of liquidity that provides information to management and investors, even if negative, about the amount of cash used in our operations and for investments in property and equipment and capitalized software development costs, adjusted for non-recurring expenditures. However, we caution that adjusted free cash flow does not reflect our future contractual commitments and the total increase or decrease of our cash balance for a given period.

 

 

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FY2023 20-F

 

The following table provides a reconciliation of adjusted free cash flow to net cash provided by operating activities for the periods indicated:

 

		Year ended December 31,
		2023				2022				2021
						(in thousands)
Net cash provided by operating activities		$	215,404			$	27,138			$	16,355
Purchase of property and equipment			(7,901	)			(16,003	)			(11,578	)
Capitalized software development costs			(2,558	)			(2,998	)			(2,180	)
Purchase of property and equipment related to build-out of our new corporate headquarters			—				—				7,303
Adjusted free cash flow		$	204,945			$	8,137			$	7,303

 

B. Liquidity and Capital Resources

 

As of December 31, 2023, we had $1,116.1 million in cash and cash equivalents. In June 2021, we received net proceeds from our IPO and concurrent private placement of $735.9 million. In the year ended December 31, 2023, we generated net cash provided by operating activities for the third consecutive year since our IPO.

 

Excluding capital raises, our principal sources of funds are from our deferred revenue, which is included in the liabilities section of our consolidated balance sheet. Deferred revenue consists of payments received in advance of revenue recognition, excluding amounts subject to right of return, and is recognized as revenue recognition criteria are met. We generally invoice our customers in advance of services being provided. The majority of our deferred revenue is expected to be recognized as revenue during the succeeding 12-month period, provided all other revenue recognition criteria have been met. As of December 31, 2023 and 2022, we had deferred revenue of $269.5 million and $200.5 million, respectively. We have generated losses from our operations as reflected in our accumulated deficit of $584.4 million and $582.5 million as of December 31, 2023 and 2022, respectively. Our future capital requirements will depend on many factors, including revenue growth and costs incurred to support customer usage and growth in our customer base, increased research and development expenses to support the growth of our business and related infrastructure, and general and administrative expenses to support being a publicly traded company.

 

We assess our liquidity primarily through our cash on hand as well as the projected timing of billings under contract with our paying customers and related collection cycles. We believe that our current cash and cash equivalents

 

 

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FY2023 20-F

 

will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months and for the foreseeable future.

 

Cash Flows

 

The following table presents the summary consolidated cash flow information for the periods presented:

 

		Year ended December 31,
		2023				2022				2021
						(in thousands)
Net cash provided by operating activities		$	215,404			$	27,138			$	16,355
Net cash used in investing activities			(10,459	)			(19,001	)			(3,629	)
Net cash provided by (used in) financing activities		$	25,289			$	(9,055	)		$	742,272

 

For a comparison of the years ended December 31, 2022 and 2021, please see our Annual Report on Form 20-F for the year ended December 31, 2022, filed with the SEC on March 14, 2023.

 

Operating Activities

 

Cash provided by operating activities for the year ended December 31, 2023 of $215.4 million was primarily related to our net loss of $1.9 million, adjusted for non-cash charges of $109.2 million and net cash inflows of $108.1 million resulting from changes in our operating assets and liabilities. Non-cash charges primarily consisted of share-based compensation and depreciation and amortization of property and equipment. The main drivers of the changes in operating assets and liabilities were a $68.9 million increase in deferred revenue, resulting primarily from increased billings for subscriptions, a $14.6 million increase in accrued expenses and other liabilities, a $11.8 million increase in prepaid expenses and other assets and a $17.4 million increase in accounts payable primarily driven by payments timing differences. These amounts were partially offset by a $4.7 million increase in accounts receivable, net, due to increases in sales, primarily driven by timing differences.

 

Investing Activities

 

Cash used in investing activities during the year ended December 31, 2023 was $10.5 million, as a result of purchases of property and equipment and capitalized software development costs.

 

Financing Activities

 

Cash provided by financing activities for the year ended December 31, 2023 was $25.3 million and was primarily as a result of proceeds of $21.2 million from exercise of share options and purchases under the employee share purchase plan and a $4.0 million of receipt of tax advance relating to exercises of share options and RSUs, net.

 

 

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FY2023 20-F

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements, as defined by applicable regulations of the SEC, that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

 

C. Research and development, patents and licenses, etc.

 

Refer to “Part 1 - Who We Are” and “Part 4 - Operating and Financial Review and Prospects - Operating Results” for information on our research and development policies for the last three years.

 

D. Trend information

 

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events since December 31, 2023 that are reasonably likely to have a material adverse effect on our net revenue, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.

 

E. Critical Accounting Estimates

 

Our significant accounting estimates and their effect on our financial condition and results of operations are more fully described in our audited consolidated financial statements included elsewhere in this annual report. We have prepared our financial statements in conformity with GAAP, which requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our financial condition or results of operations. These estimates are prepared using our best judgment, after considering past and current events and economic conditions. While management believes the factors evaluated provide a meaningful basis for establishing and applying sound accounting policies, management cannot guarantee that the estimates will always be consistent with actual results.

 

These estimates are based on information available as of the date of the financial statements; therefore, actual results could differ from those estimates. The critical accounting estimates that we believe have the most significant impact on our consolidated financial statements are described below.

 

Revenue Recognition

 

Our revenues consist of revenue from the sale of subscriptions to customers to access our Work OS. Our subscription contracts are offered primarily on a monthly or annual basis, and a large portion of the arrangements are paid in full up-front at the outset of the arrangement. Customers may not take possession over the software and instead are granted continuous access to

 

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the platform over the contractual period. Accordingly, the arrangements are accounted for as service contracts.

 

Our subscription contracts generally include a fixed number of users and fixed price per user.

 

Revenue for these arrangements is recognized ratably over the contract term. Our subscription contracts are generally non-cancelable except for contracts with first-time customers whereby the contract terms provide rights to cancel the contract in the first 30 days for a pro-rated refund for unutilized days.

 

Historically, refunds have not been material and can be reasonably estimated, and therefore no provision for refund liability was recorded to date.

 

In accordance with ASC 606, revenue is recognized when a customer obtains control of promised services. The amount of revenue recognized reflects the consideration we expect to be entitled to receive in exchange for these services. We determine revenue recognition through the following steps:

 

1. Identification of the contract, or contracts, with the customer. 

We consider the terms and conditions of our contracts and the customary business practices in identifying our contracts under ASC 606. We determine a contract with a customer to exist when the contract has been approved by both parties, it can identify each party’s rights regarding the services to be transferred and the payment terms for the services, it has determined the customer to have the ability and intent to pay, and the contract has commercial substance.

 

We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s payment history or, in the case of a new customer, credit and financial information pertaining to the customer.

 

2. Identification of the performance obligations in the contract.

Performance obligations committed in a contract are identified based on the services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract.

 

Our performance obligations generally consist of access to our Work OS and related support services which is considered one performance obligation.

 

Our customers do not have the ability to take possession of the software, and through access to the platform we provide a series of distinct software-based services that are satisfied over the term of the subscription.

 

3. Determination of the transaction price. 

The transaction price is determined based on the consideration to which we expect to be entitled in exchange for transferring services to the customer.

 

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Payment terms are generally upfront at the time of the transaction, except for enterprise customers which are generally net 30 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. We applied the practical expedient in ASC 606 and did not evaluate payment terms of one year or less for the existence of a significant financing component. Our policy is to exclude sales and other indirect taxes when measuring the transaction price.

 

4. Allocation of the transaction price to the performance obligations in the contract.

Our contracts contain a single performance obligation. Therefore, the entire transaction price is allocated to the single performance obligation.

 

5. Recognition of the revenue when, or as, a performance obligation is satisfied.

Revenue is recognized ratably over the term of the subscription agreement, generally beginning on the date that the platform is made available to a customer.

 

We record contract liabilities when cash payments are received in advance of performance to deferred revenue or to customer advances in case of refund rights.

 

For costs associated with contracts up to one year, we elected to apply the practical expedient and expense these contract costs as incurred. Costs associated with multi-year contracts have been capitalized and amortized over the associated contract period.

 

F. Recently Issued Accounting Pronouncements

 

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our audited consolidated financial statements included elsewhere in this annual report.

 

G. Quantitative and Qualitative Disclosures About Market Risk

 

We are exposed to market risk in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of foreign currency exchange rates and interest rates, which are discussed in detail below.

 

Foreign Currency Risk

The U.S. dollar is our functional currency. The majority of our revenue was denominated in U.S. dollars for the years ended December 31, 2023, 2022 and 2021, however certain expenses comprising our cost of revenue and operating expenses were denominated in NIS, mainly payroll and rent.

 

This foreign currency exposure gives rise to market risk associated with exchange rate movements of the U.S. dollar against the NIS. Furthermore,

 

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