MNDY's Spending Surge Intensifies: Is Margin Expansion at Risk?

Core Insights - Monday.com (MNDY) is experiencing pressure on profitability due to aggressive spending and slowing revenue growth, with Q2 2025 revenue increasing by 27% year-over-year to $299 million, down from 34% growth in Q2 2024 [1] - The Zacks Consensus Estimate for Q3 2025 revenue is $312.1 million, indicating a further slowdown to 24.3% growth from the previous year [1] Expense and Operational Efficiency - Research and development costs rose to 20% of revenues in Q2 2025, up from 16% a year earlier, driven by increased AI investments [2] - Sales and marketing expenses accounted for 47% of revenue, highlighting the company's reliance on costly customer acquisition strategies [2] - Non-GAAP operating margin decreased to 15% in Q2 2025 from 16% in the same period last year, indicating declining operational efficiency [3] Competitive Landscape - MNDY faces significant competition from Salesforce (CRM) and Atlassian (TEAM), both of which have demonstrated profitable scaling with Salesforce achieving 11% revenue growth and a non-GAAP operating margin above 30%, while Atlassian reported 22% revenue growth and a 24.3% non-GAAP operating margin [5] Share Price and Valuation - MNDY shares have declined by 19% year-to-date, underperforming the Zacks Internet-Software industry and the Zacks Computer and Technology sector, which increased by 15.4% and 20.4%, respectively [6] - The stock is trading at a forward 12-month Price/Sales ratio of 6.84X, compared to the industry's 5.74X, indicating a less favorable valuation [10] Earnings Estimates - The Zacks Consensus Estimate for MNDY's Q3 2025 earnings is 88 cents per share, reflecting a 3.53% year-over-year growth, with a recent upward revision of 2 cents [13]