Investors were hoping that the gains they enjoyed last Friday might be the beginning of a larger bounce. Yet often, Wall Street disappoints those who are hunting for a bottom in the market, and that proved to be the case on Monday. Most major indexes are down, with the Nasdaq Composite (^IXIC 1.37%) leading the way lower with a decline of greater than 1% as of 11:30 a.m. ET.
Contributing to some of the downward pressure were two companies that reported their latest financial results. Both Wix.com (WIX -1.03%) and Monday.com (MNDY -1.54%) were lower following their respective reports, although there was a lot more uncertainty about what the future could bring for these tech companies.
Wix delivers modest growth
Shares of Wix.com were down about 4% on Monday afternoon. The provider of tools enterprise customers and individuals can use to create a digital presence on the internet continued to grow, but at rates that were slower than some investors had wanted to see.
Wix's numbers were consistent with what shareholders have seen in the past. Total revenue for the first quarter of 2022 was up 14% year over year (YOY) to $342 million. Total bookings climbed 12% from year-ago levels, hitting $393 million. However, Wix continued to lose money, posting an adjusted net loss of $41 million, or $0.72 per share.
Wix was quick to assert that difficult comparisons with year-earlier results played a role in holding back this year's growth. Indeed, over the past two years, sales and bookings have risen at average annual rates of 27% and 22% respectively.
However, Wix projected further slowdowns in its near-term growth, pointing to macroeconomic headwinds and global uncertainty in giving guidance for revenue in the second quarter to rise just 8% to 10%. The website provider has longer-term plans to boost margins and reach sustained profitability, but investors seem impatient to see results sooner rather than later.
Monday sinks despite sharp growth
Shares of Monday.com were down 7% on Monday morning. The move came despite some impressive numbers pointing to the work operating system provider's traction among enterprise customers.
Monday's first-quarter results looked good on their face. First-quarter revenue jumped 84% YOY to $108.5 million. Net dollar retention rates came in above 125%, including a higher rate of more than 150% for customers generating at least $50,000 in annual recurring revenue for the software-as-a-service company. The number of these large customers nearly tripled in the past 12 months to 960.
However, adjusted net losses widened to $0.96 per share, and investors weren't entirely satisfied with Monday's guidance for the rest of the year. Monday expects 2022 revenue to come in between $488 million and $492 million, representing YOY growth of 58% to 60%. That's impressive, but it does represent a significant slowdown, and investors haven't been forgiving of high-growth stocks when they fall short of extremely high expectations.
For investors who had hoped that negativity about tech disruptors selling their software via subscriptions had come to an end last week, today's moves in Monday and Wix were disappointing. Nevertheless, both companies have solid long-term prospects in serving customers. Today's declines only add to the losses the two stocks have seen in recent months, but they could be setting the stage for an attractive buying opportunity.