Project management software maker Monday.com (NASDAQ:MNDY) reported results for its second quarter of fiscal 2024 that beat Wall Street analysts’ expectations. Revenue rose 34.4% year over year to $236.1 million. The company also expects revenue in the next quarter to be around $245 million, slightly above analyst estimates. The company posted non-GAAP earnings of $0.94 per share, improving from earnings of $0.41 per share in the same quarter last year.
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Monday.com (MNDY) Q2 CY2024 Highlights:
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Revenue: $236.1 million versus analyst estimates of $229.1 million (up 3.1%)
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Adjusted operating result: $38.42 million versus analyst estimates of $20 million (92.1% above)
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Earnings per share (non-GAAP): $0.94 versus analyst estimates of $0.56 (67.3%)
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Sales forecast for the 3rd quarter of the calendar year 2024 is on average 245 million US dollars, above analyst estimates of 243 million US dollars
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The company increased its sales forecast for the full year from USD 945 million to USD 958.5 million on average, an increase of 1.4%
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Gross margin (GAAP): 89.9%, compared to 88.9% in the same quarter last year
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Free cash flow of $50.82 million, a decrease of 43.5% from the previous quarter
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Net sales retention rate: 114%, compared to 110% in the previous quarter
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Customers: 2,713 customers pay more than $50,000 annually
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Market capitalization: 11.23 billion US dollars
“monday.com delivered a strong second quarter and we are very encouraged by the progress we continue to make toward our near-term and long-term financial goals,” said Eliran Glazer, CFO of monday.com.
Founded in Israel in 2014 and named after the dreaded first day of the work week, Monday.com (NASDAQ: MNDY) makes software-as-a-service platforms that help teams plan and track their work efficiently.
Project management software
The future of work requires teams to collaborate across departments and locations. Project management software is both driving this change and benefiting from it. While the trend toward collaborative work management has been strong for some time, the Covid pandemic has definitely accelerated the demand for tools that enable remote work.
Sales growth
As you can see below, Monday.com’s annualized revenue growth of 56% over the past three years has been incredible, and revenues this quarter totaled $236.1 million.
Unsurprisingly, this was another great quarter for Monday.com, with revenue up 34.4% year-over-year. Additionally, revenue increased by $19.19 million quarter-over-quarter, a very strong improvement over the $14.34 million increase in the first quarter of calendar year 2024. This is a sign of renewed acceleration in growth and is nice to see.
In its forecast for the next quarter, Monday.com expects revenue to rise 29.5% to $245 million, slowing from the 38.2% increase in the same quarter last year. Analysts who follow the company had expected revenue to rise 26.4% for the next 12 months before the earnings announcement.
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Growth among major customers
This quarter, Monday.com reported 2,713 enterprise customers paying more than $50,000 annually, 222 more than the previous quarter. This is significantly more signings than last quarter and significantly more than we have typically seen in past quarters. This shows that the business is showing good revenue momentum. We believe shareholders will see this as an indication that the company’s go-to-market strategy is working very well.
Key takeaways from Monday.com’s Q2 results
We were pleased to see Monday.com significantly improve its net sales retention this quarter. We were also pleased to see revenue and operating profit beat Wall Street estimates. Guidance was also good. Revenue guidance for next quarter beat expectations and full-year guidance was raised. Overall, this was a great quarter with few blemishes. The stock rose 5.9% to $239 immediately after the report.
Monday.com may have had a good quarter, but does that mean you should invest now? When making this decision, it’s important to consider the valuation, business qualities, as well as what happened last quarter. We cover that in our actionable full research report, which you can read for free here.
