Monday.com’s second quarter was marked by robust revenue growth and non-GAAP profitability that both exceeded Wall Street expectations. Despite these headline beats, the market responded sharply negatively, reflecting concerns around operating margin compression and uncertainty in the company’s customer acquisition channels. Management attributed Q2’s results to continued expansion in enterprise accounts and accelerated adoption of its AI-powered platform features. Co-CEO Roy Mann highlighted that, “customer adoption of our AI capabilities accelerated across the monday.com platform, with users performing 46 million AI-driven actions since launch,” citing the company’s push to embed AI at the core of its offerings. However, leadership also acknowledged emerging headwinds in acquiring smaller customers, particularly due to search engine algorithm changes, while reiterating that retention rates remain healthy.
Is now the time to buy MNDY? Find out in our full research report (it’s free).
monday.com (MNDY) Q2 CY2025 Highlights:
- Revenue: $299 million vs analyst estimates of $293.7 million (26.6% year-on-year growth, 1.8% beat)
- Adjusted EPS: $1.09 vs analyst estimates of $0.86 (27% beat)
- Adjusted Operating Income: $45.09 million vs analyst estimates of $33.55 million (15.1% margin, 34.4% beat)
- The company slightly lifted its revenue guidance for the full year to $1.23 billion at the midpoint from $1.22 billion
- Operating Margin: -3.9%, down from 0.8% in the same quarter last year
- Customers: 3,702 customers paying more than $50,000 annually
- Net Revenue Retention Rate: 115%, in line with the previous quarter
- Annual Recurring Revenue: $1.20 billion vs analyst estimates of $1.18 billion (26.6% year-on-year growth, 1.7% beat)
- Billings: $317.4 million at quarter end, up 26.6% year on year
- Market Capitalization: $9.06 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From monday.com’s Q2 Earnings Call
- Kasthuri Gopalan Rangan (Goldman Sachs) asked how new executive hires and product diversification would accelerate growth inflection. Co-CEO Eran Zinman described dual efforts: upmarket expansion through leadership changes and broader product bundling for smaller businesses.
- Aleksandr J. Zukin (Wolfe Research) pressed on demand linearity and billings trends. CFO Eliran Glazer downplayed billings as a metric, noting ARR growth is a better indicator, and said net revenue retention should stabilize near current levels.
- Jackson Edmund Ader (KeyBanc Capital Markets) inquired about sales hiring pace and CRM net new account trends. Zinman attributed CRM growth to larger deals and seasonality, stating account count is less meaningful as focus shifts to higher-value customers.
- Brent John Thill (Jefferies) focused on the impact of Google algorithm changes on customer acquisition. Management emphasized the effect is limited to volume, not quality, and expressed confidence in mitigating these shifts by reallocating marketing resources.
- Taylor Anne McGinnis (UBS) questioned the rationale behind conservative revenue guidance for the second half. Glazer said guidance reflects uncertainty in customer acquisition channels and the company’s prudent approach to forecasting.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) how effectively Monday.com monetizes its new AI-driven features and expands enterprise customer adoption, (2) whether recently hired executives can accelerate sales efficiency and customer retention, and (3) the pace of recovery in small business customer acquisition as digital marketing channels evolve. Continued progress in cross-selling new products and maintaining high retention rates will also be key markers of execution.
monday.com currently trades at $175.80, down from $248.02 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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