Project management software maker Monday.com (NASDAQ:MNDY) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 26.6% year on year to $299 million. The company expects next quarter’s revenue to be around $312 million, close to analysts’ estimates. Its non-GAAP profit of $1.09 per share was 27% above analysts’ consensus estimates.
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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 at quarter end, up 26.6% year on year
- Billings: $317.4 million at quarter end, up 26.6% year on year
- Market Capitalization: $8.95 billion
StockStory’s Take
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.
Looking ahead, Monday.com’s guidance rests on continued enterprise momentum, expansion of new AI-driven products, and ongoing investments in sales and product development. Management emphasized that the company’s strategy involves balancing growth with operational efficiency while responding to shifts in performance marketing and customer behavior. CFO Eliran Glazer noted, “our full year guidance already reflects the strong execution that we have seen year-to-date, and we continue to cut for areas of uncertainty.” The company remains focused on scaling its multi-product approach—especially in CRM and service offerings—and believes that recent executive hires will help drive upmarket growth and customer retention, even as it monitors the impact of evolving digital marketing dynamics.
Key Insights from Management’s Remarks
Management credited Q2 performance to enterprise expansion, rapid AI adoption, and targeted strategic hires, while highlighting actions taken to address softness in small business customer acquisition.
- Enterprise customer momentum: The fastest growth came from large organizations, with record net additions of customers paying over $100,000 annually. Management sees this as validation of its upmarket strategy, driven by tailored solutions.
- AI product adoption: Monday.com rolled out three new AI-powered capabilities—monday magic, monday vibe, and monday sidekick—that allow users to automate workflows, build custom applications without code, and receive proactive support. The company reported 46 million AI actions since launch, suggesting strong traction and engagement.
- CRM product milestone: Monday CRM reached $100 million in annual recurring revenue, reflecting rising demand for flexible, customizable customer relationship management tools. Management emphasized that the CRM business is moving upmarket, with average contract values increasing more than 20% year-over-year.
- Executive leadership changes: The company appointed Harris Beber as Chief Marketing Officer and Adi Dar as its first Chief Customer Officer, aiming to enhance global marketing reach and improve customer retention. These hires are expected to strengthen go-to-market execution and the end-to-end customer experience.
- Small business softness and mitigation: Management acknowledged a slowdown in small and mid-sized customer additions, partially attributed to changes in Google search algorithms affecting digital marketing efficiency. Leadership is reallocating resources to more efficient channels and expects these impacts to be temporary.
Drivers of Future Performance
Monday.com’s outlook is driven by enterprise expansion, AI adoption, and cautious resource allocation in response to evolving marketing channels.
- Enterprise and multi-product strategy: Management expects continued growth from larger accounts and cross-selling of new products like CRM and Service, with a focus on landing high-value customers and increasing average contract sizes. The company’s multi-product approach is designed to deepen penetration within existing customers while expanding upmarket.
- AI monetization and platform evolution: The rollout of AI-powered features is expected to drive greater usage, customer stickiness, and incremental revenue opportunities. Management highlighted that monetization efforts around AI credits are already underway, and further product enhancements are planned.
- Customer acquisition headwinds: The company is proactively managing challenges in digital marketing, particularly from search algorithm changes impacting small business acquisition. Management has built these uncertainties into its guidance and is shifting budget to higher-return channels, with the expectation that enterprise momentum will offset these pressures.
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 $176.99, down from $248.02 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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