monday.com (MNDY) Q2 2025 Earnings Call August 11, 2025 08:30 AM ET Company ParticipantsByron Stephen - VP - IRRoy Mann - Co-Founder, Co-CEO & DirectorEran Zinman - Co-Founder, Co-CEO, & DirectorEliran Glazer - CFOKash Rangan - Managing DirectorAlex Zukin - MD & Software Equity ResearchJackson Ader - Managing DirectorArjun Bhatia - Co-Group Head - Technology, Media & CommunicationsBrent Thill - MD & Tech Sector Leader - Software & Internet ResearchRaimo Lenschow - Managing DirectorMatt Bullock - Equity Rese ...

Financial Data and Key Metrics Changes - Total revenue for Q2 reached $299 million, reflecting a 27% year-over-year growth [11] - Non-GAAP operating margin improved to 15%, indicating enhanced efficiency [4] - Net income increased to $58.3 million from $49.3 million in the same quarter last year [13] - Adjusted free cash flow for Q2 was $64.1 million, with a margin of 21% [14] - The company ended the quarter with $1.59 billion in cash and cash equivalents, up from $1.53 billion at the end of Q1 [14] Business Line Data and Key Metrics Changes - The enterprise segment is the fastest-growing, achieving a record number of new customers paying over $100,000 annually [7] - Monday CRM reached $100 million in annual recurring revenue, highlighting strong demand for its customizable platform [7] - Research and development expenses were $59.2 million, representing 20% of revenue, up from 16% year-over-year [13] Market Data and Key Metrics Changes - Overall net dollar retention (NDR) was stable at 111% for Q2, expected to remain stable throughout fiscal year 2025 [11] - The company noted some softness in the downmarket due to changes in Google's algorithm, but overall demand remains strong [27][28] Company Strategy and Development Direction - The company is focusing on expanding its AI capabilities, with significant user engagement in AI-driven actions [5] - New executive appointments, including a Chief Marketing Officer and a Chief Customer Officer, aim to enhance go-to-market strategies and customer retention [8][9] - The company plans to continue investing in product development and sales to capture growth opportunities [102] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the second half of the year despite some challenges in the downmarket [28] - The company is optimistic about the impact of new executive leadership on enterprise growth and customer retention [21][76] - Future guidance reflects a cautious but positive outlook, with expectations for revenue growth of 24% to 25% year-over-year for fiscal year 2025 [15] Other Important Information - The company is preparing for its Investor Day on September 17, which will showcase its progress and long-term vision [9] - Adjusted free cash flow for the full year is expected to be between $320 million and $326 million, with a margin of 26% to 27% [15] Q&A Session Summary Question: Concerns about enterprise growth and new product adoption - Management acknowledged the importance of new executive hires in driving enterprise growth and improving customer retention [21] Question: Demand environment and spending trends - Demand remains strong, particularly in the enterprise segment, despite some softness in the downmarket due to Google algorithm changes [27][28] Question: Billings and NDR outlook - Management clarified that calculated billings are not the best measure of business health, emphasizing ARR growth instead [30] Question: Sales hiring and productivity - The company is ramping up hiring in sales and marketing, focusing on both enterprise and new product specialists [36][38] Question: CRM business performance - The CRM segment is seeing significant growth, with a focus on acquiring larger customers and increasing average contract value [110] Question: Impact of Google changes on customer acquisition - Management noted that while there is some impact on customer acquisition, it is manageable and not significantly affecting overall performance [53][84] Question: Strategic priorities regarding cash reserves - The company prioritizes organic growth but is also considering M&A opportunities to enhance its product offerings [117] Question: Focus on larger enterprise opportunities - The company is targeting larger multi-thousand seat opportunities while maintaining commitment to mid-market and SMB segments [122]

Financial Data and Key Metrics Changes - The company reported a robust revenue growth of 30% year over year, with total revenue reaching $282 million in Q1 2025 [6][13] - Gross margin for Q1 was 90%, with expectations to remain in the high 80s range in the medium to long term [14] - Net income increased to $58.4 million in Q1 2025, up from $31.7 million in Q1 2024, resulting in a diluted net income per share of $1.1 [15] - Adjusted free cash flow for Q1 was $109.5 million, with an adjusted free cash flow margin of 39% [16] Business Line Data and Key Metrics Changes - The enterprise segment continued to be the fastest-growing area, with new capabilities launched for the work management enterprise tier [10] - The company saw strong performance in its CRM and service business, with 70% of the AR for Monday service coming from mid-market and enterprise segments [29] Market Data and Key Metrics Changes - Overall Net Dollar Retention (NDR) was stable at 112% in Q1, with improving retention for larger customer cohorts [13][31] - The company expects NDR to potentially be slightly below 112% by the end of the year due to macroeconomic uncertainties [31][95] Company Strategy and Development Direction - The company is focused on product innovation, including AI-powered features, which are rapidly adopted by customers [7][8] - The appointment of Casey George as Chief Revenue Officer is expected to accelerate enterprise growth and strengthen customer relationships [11][12] - The company aims to capitalize on significant growth opportunities despite macroeconomic uncertainties [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather uncertainties and continue delivering value for customers and shareholders [8][12] - The company anticipates revenue for Q2 2025 to be in the range of $292 million to $294 million, representing growth of 24% to 25% year over year [17] - Full-year revenue guidance for 2025 is projected to be between $1.002 billion and $1.226 billion, indicating growth of 25% to 26% year over year [18] Other Important Information - The company ended Q1 with $1.53 billion in cash and cash equivalents, an increase from $1.41 billion at the end of Q4 [16] - The company plans to grow headcount by approximately 30% in fiscal year 2025, with a total employee count of 2,695 at the end of Q1 [15][66] Q&A Session Summary Question: Insights on the go-to-market approach with the new Chief Revenue Officer - Management expressed excitement about the new hire and emphasized the importance of maintaining a balance between product-led growth and sales-led strategies [20][22] Question: Performance of CRM and service business - Management noted strong momentum in customer additions and highlighted that 70% of AR for Monday service comes from mid-market and enterprise segments [29][31] Question: Impact of FX on revenue - Management acknowledged some negative FX impact in Q1 but expects it to be less than 1% for the full year, taking a conservative approach due to macroeconomic uncertainties [36][44] Question: Trends in enterprise versus SMB - Management indicated consistent demand across all segments, with enterprise being the fastest-growing segment [48] Question: Cross-sell momentum in larger enterprises - Management noted that most expansions are driven by existing accounts adding more seats, with cross-sell opportunities expected to grow over time [52] Question: Geographic performance and growth deceleration in Europe - Management reported some challenges in Europe compared to North America but remains optimistic about stabilization [99] Question: Guidance assumptions and macroeconomic impact - Management reiterated a conservative approach to guidance due to uncertainties, with expectations for mid to high single-digit customer growth [103]

Financial Data and Key Metrics Changes - The company reported total revenue of $282 million for Q1 2025, reflecting a 30% year-over-year growth [12] - Gross margin for Q1 was 90%, with expectations to remain in the high 80s range in the medium to long term [13] - Net income increased to $58.4 million in Q1 2025, up from $31.7 million in Q1 2024, resulting in a diluted net income per share of $1.1 [14] - Adjusted free cash flow for Q1 was $109.5 million, with a margin of 39% [15] Business Line Data and Key Metrics Changes - The enterprise segment continued to be the fastest-growing area, with new capabilities launched for enterprise customers [9] - The company achieved stable Net Dollar Retention (NDR) at 112% in Q1, with improving retention for larger customer cohorts [12][31] - Research and development expenses were $53.8 million, representing 19% of revenue, an increase from 16% in the previous year [13] Market Data and Key Metrics Changes - The company noted strong performance in both enterprise and mid-market segments, with no major changes in demand observed going into April [47] - The European market showed some challenges compared to North America, but overall progress was deemed satisfactory [96] Company Strategy and Development Direction - The company is focused on product innovation, including AI-powered features, to enhance customer experience and operational efficiency [6][11] - The appointment of a new Chief Revenue Officer is expected to accelerate enterprise growth and strengthen customer relationships [10] - The company aims to maintain a dual approach of product-led growth and sales-led strategies while expanding its multi-product offerings [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic uncertainties, citing strong product offerings and a resilient business model [11] - The outlook for Q2 2025 anticipates revenue between $292 million and $294 million, representing a growth of 24% to 25% year-over-year [16] - Management acknowledged potential challenges in customer behavior due to macroeconomic factors, leading to a more conservative outlook for NDR [31][92] Other Important Information - The company ended Q1 with $1.53 billion in cash and cash equivalents, an increase from $1.41 billion at the end of Q4 [15] - The company plans to grow its headcount by approximately 30% in fiscal year 2025, with a focus on sales and R&D [14][65] Q&A Session Summary Question: Insights on the go-to-market approach with the new Chief Revenue Officer - Management emphasized the importance of preserving the successful combination of product-led and sales-led growth strategies while leveraging the new executive's experience to enhance enterprise sales [20][21] Question: Performance of CRM and service business in Q1 - Management reported strong momentum in customer additions, particularly in the mid-market and enterprise segments, with a focus on performance marketing [29][30] Question: Growth of AI actions and monetization - The company noted significant growth in AI actions, with ongoing experimentation in monetization, indicating a correlation between usage and pricing [33][34] Question: Impact of foreign exchange on Q1 revenue - Management acknowledged a negative FX impact in Q1 but projected it to be less than 1% for the full year, adopting a conservative approach due to macroeconomic uncertainties [36][44] Question: Trends in enterprise versus SMB segments - Management indicated consistent demand across both segments, with enterprise remaining the fastest-growing area [47] Question: Cross-sell momentum in larger customer accounts - The majority of expansions in enterprise accounts are driven by adding significant seats rather than cross-sell, although there is potential for more cross-sell in managed services [51][52] Question: Geographic performance and stability - Demand has been healthy and consistent across all regions, with no unusual activity noted in Q1 [53][96] Question: Changes in competition and win rates - Management reported no significant changes in competition or win rates across enterprise and SMB segments [72]

Financial Data and Key Metrics Changes - The company reported total revenue of $282 million for Q1, representing a 30% year-over-year growth [11] - Gross margin for Q1 was 90%, with expectations to remain in the high 80s range in the medium to long term [12] - Net income increased to $58.4 million in Q1, up from $31.7 million in the same quarter last year [13] - Adjusted free cash flow for Q1 was $109.5 million, with a margin of 39% [14] - The company ended the quarter with $1.53 billion in cash and cash equivalents, an increase from $1.41 billion at the end of Q4 [14] Business Line Data and Key Metrics Changes - The enterprise segment continued to be the fastest-growing area, with new capabilities launched for enhanced visibility and control [7] - The company saw strong performance in its product suite, particularly in customer net adds, driven by performance marketing investments [28] - The service product generated 70% of its annual recurring revenue from mid-market and enterprise segments [28] Market Data and Key Metrics Changes - Overall Net Dollar Retention (NDR) was stable at 112% in Q1, with improving retention for larger customer cohorts [11] - The company expects NDR to potentially be slightly below 112% by the end of the year due to macroeconomic uncertainties [31] Company Strategy and Development Direction - The company is focused on product innovation, including AI-powered features, which have seen rapid adoption among users [4] - The appointment of a new Chief Revenue Officer is expected to accelerate enterprise growth and strengthen customer relationships [9] - The company aims to maintain a dual approach of product-led growth and sales-led motion while scaling its multi-product strategy [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to weather uncertainties in the market, emphasizing the importance of their flexible platform [5] - Despite macroeconomic challenges, the company remains optimistic about its growth opportunities and strategic initiatives [10] - The guidance for Q2 revenue is projected to be between $292 million and $294 million, reflecting a year-over-year growth of 24% to 25% [15] Other Important Information - The company plans to grow its headcount by approximately 30% in fiscal year 2025, with a focus on sales and R&D [13][64] - Adjusted free cash flow for the full year is expected to be between $310 million and $316 million, with a margin of 25% to 26% [16] Q&A Session Summary Question: Insights on the go-to-market approach with the new Chief Revenue Officer - Management expressed excitement about the new hire and emphasized the importance of maintaining both product-led and sales-led strategies while scaling [20] Question: Performance of CRM and service business in Q1 - Management noted strong momentum across the product suite, with significant contributions from mid-market and enterprise segments [28] Question: Growth of AI actions and monetization - The company reported over 26 million AI actions performed by users, with monetization still in early stages but showing potential [33] Question: Impact of foreign exchange on revenue - Management acknowledged some negative FX impact in Q1 but expects it to be less than 1% for the full year [35] Question: Trends in customer behavior and deal cycles - Management indicated that larger enterprises may take longer to make purchasing decisions, but demand remains healthy [60] Question: Geographic performance and growth deceleration in Europe - Management noted challenges in Europe compared to North America but remains optimistic about stabilization [94]