👉 Background: Monday.com was founded in Israel in 2014 as a project management platform (think: tracking projects, visualizing data, team collaboration). It competes with Atlassian's Jira and Asana in the workplace productivity space.

👉 What happened: In 2021, Monday.com IPO'd on the NASDAQ when it was still "peak WFH" and "peak need-for-remote-collaboration-tools." And, its share price doubled from $189 per share to $380... and then went back down again. Now, Monday.com announced a 42% increase in revenue for the second quarter.

👉 What else: But, not everything is coming up Milhouse for Monday.com. They're facing the same sort of slowdown in net revenue retention that we are seeing at many other software companies.

What's the key learning?

💡Net revenue retention calculates the total revenue from existing customers less any revenue churn. That'd be: contract expirations, cancellations, or downgrades. And this doesn't include new customers.

A net retention rate of less than 100% means that your Annual Recurring Revenue is lower than it was  a year ago from the same set of customers

💡This metric is so important for software-as-a-service companies like Monday.com because these companies are only able to grow by doing two things:

• Number one: selling their products to new customers
• Number two: selling more of their products to existing customers, like more seats or more advanced plans

💡When your net revenue retention starts to slow down or go negative, it means you need to acquire new customers... which is a lot more expensive than to grow the value of existing accounts.

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