monday.com Ltd (NASDAQ:MNDY) Reports Strong Q2 2025 Earnings but Shares Plunge on Profitability Concerns

monday.com Ltd (NASDAQ:MNDY) Reports Strong Q2 2025 Results, but Shares Drop Sharply

monday.com Ltd delivered a solid second-quarter performance, surpassing analyst expectations on both revenue and earnings per share (EPS). However, the market reaction has been sharply negative, with shares falling over 15% in pre-market trading.

Key Financial Highlights vs. Estimates

• Revenue: $299.0 million, up 27% year-over-year, slightly below the consensus estimate of $299.4 million.
• Non-GAAP EPS: $1.09, beating estimates of $0.88 by 24%.
• GAAP EPS: $0.03, down significantly from $0.27 in Q2 2024, reflecting higher operating expenses.

Despite the earnings beat, investors appear concerned about the company’s GAAP profitability, which swung to an operating loss of $11.6 million compared to a $1.8 million profit in the prior-year quarter.

Market Reaction: Why the Selloff?

The sharp decline in MNDY shares suggests that investors are focusing on:

1. Slowing Revenue Growth: While revenue grew 27% YoY, this marks a deceleration from previous quarters.
2. Margin Pressures: Non-GAAP operating margin declined to 15% from 16% a year ago, reflecting increased investments in R&D and sales.
3. Guidance Concerns: The company’s Q3 revenue outlook of $311–$313 million (24–25% YoY growth) aligns with estimates but does not signal an acceleration.

Business Highlights

• Enterprise Growth: Customers with over $50,000 in annual recurring revenue (ARR) grew 36% YoY, while those with over $100,000 in ARR surged 46%.
• Net Dollar Retention (NDR): Remained strong at 111%, with higher-tier customers showing even better retention (117% for $100K+ ARR clients).
• AI Innovations: The company launched new AI-powered features (monday magic, monday vibe, monday sidekick) and highlighted strong adoption of its CRM product, which surpassed $100 million in ARR.

Outlook vs. Analyst Expectations

For full-year 2025, monday.com expects:

• Revenue: $1.224–$1.229 billion (vs. analyst consensus of $1.248 billion).
• Non-GAAP Operating Income: $154–$158 million (implying a ~13% margin).
• Free Cash Flow: $320–$326 million (26–27% margin).

While the guidance is largely in line, the lack of an upward revision may have disappointed investors hoping for stronger growth signals.

Conclusion

monday.com’s Q2 results demonstrate continued enterprise traction and disciplined execution, but the market’s reaction highlights concerns over profitability and growth sustainability. The stock’s sharp decline suggests investors were expecting more robust guidance or margin expansion.

For more detailed earnings estimates and historical performance, visit monday.com’s earnings page.

Disclaimer: This article is not investment advice. Investors should conduct their own research before making decisions.