Monday.com Ltd (MNDY) delivered a strong performance in its fiscal third quarter of 2024, reporting a 33% year-over-year revenue surge to $251.0 million, surpassing analyst estimates of $246.1 million. The company’s adjusted earnings per share (EPS) also outperformed expectations, coming in at $0.85 compared to the anticipated $0.63. However, despite these positive results, the stock price took a significant dip following the announcement.
Monday.com’s robust performance was highlighted by several key indicators. The net dollar retention rate stood at 111%, reaching 114% for customers with more than ten users, showcasing strong customer loyalty and engagement. The number of paid customers with over $50,000 in annual recurring revenue (ARR) saw an impressive 40% year-over-year increase, reaching 2,907, demonstrating the company’s growing traction among larger clients. Additionally, the adjusted operating margin remained steady at 13%, indicating efficient cost management.
The company generated a healthy operating cash flow of $86.6 million and a free cash flow of $82.4 million during the quarter, compared to $66.6 million and $64.9 million, respectively, in the previous year. Monday.com’s strong financial position was further emphasized by its cash and equivalents balance of $1.4 billion as of September.
Monday.com’s co-founders and co-CEOs, Roy Mann and Eran Zinman, attributed the impressive third-quarter performance to effective execution and continuous platform improvements. They expressed enthusiasm for future growth, particularly after surpassing $1 billion in ARR.
CFO Eliran Glazer highlighted the company’s robust revenue growth, enhanced profitability, and positive retention trends, particularly as Monday.com expands its focus on larger customers. He expressed confidence in maintaining this momentum through the end of the year and into fiscal 2025, targeting sustained scalable growth.
Looking ahead, Monday.com expects fourth-quarter revenue to fall between $260 million and $262 million, exceeding the consensus estimate of $246.1 million, and an adjusted operating margin in the range of 11% to 12%. The company also raised its 2024 revenue guidance to $964 million to $966 million, compared to the prior forecast of $956 million to $961 million, and an adjusted operating margin of 12% to 13% (previously 10% to 11%).
Despite these positive projections, the stock price decline suggests that investors may be concerned about factors beyond the company’s strong performance. The broader market sentiment, competition within the project management software space, or potential economic headwinds could have contributed to the stock’s dip.
Overall, Monday.com’s third-quarter results demonstrate its continued growth and strong market position. However, the stock’s immediate reaction highlights the complexities of the market and the potential impact of external factors on company valuations.
