Monday.com's Strong Q1, Big Customer Growth, High Margins Drive Bullish Wall Street Outlook

Wall Street analysts rerated Monday.com Ltd MNDY on Tuesday after the company reported upbeat first-quarter results on Monday.

The company reported a quarterly revenue growth of 30% to $282.3 million, beating the consensus of $275.8 million. 

The project management software company’s adjusted EPS of $1.10 beat the analyst consensus estimate of 70 cents.

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Monday.com expects fiscal second-quarter 2025 revenue of $292 million to $294 million against the analyst consensus estimate of $275.8 million.

Needham analyst Scott Berg reiterated Monday.com with a Buy and a $400 price target.

First-quarter revenue was $7.2 million (2.6%), higher than Berg’s estimate, and grew 30.1%, supported by Enterprise strength and cross-selling or adoption of Monday.com’s AI features along with its CRM, Dev, and Service modules. Gross margins of 90.2% were 70bps above the analyst estimate and up 40bps, with management continuing to expect gross margins in the high 80s.

The adjusted operating income of $40.8 million, $14.6 million above Berg’s estimate, resulted in strong margin outperformance. The adjusted operating margin was 14.4%, compared to his estimate of 9.5% and up 450bps.

Cash flow from operations and free cash flow were $112 million and $107.5 million, respectively, representing margins of 39.7% and 38.1%.

Monday.com continues to see success with its push into the Enterprise, with strong net ads in its $50,000-plus and $100,000-plus ARR customers and continued expansion of its customer base in CRM, Dev, and new Service offering, the analyst said.

With Enterprise being the fastest growing segment of Monday.com’s business, Berg says hiring new CRO Casey George looks to be a deliberate focus on this area of the company.

A positive anecdote came from AI traction, with overall use sounding to be gaining steam while monetization is not currently baked into the guide, providing a potential upside driver in the second half of 2025. Overall, the macro has not impacted pipeline trends yet, but similar to others in Berg’s space, management issued a more conservative guide baked with an aspect of macro uncertainty.

Management set out new fiscal 2025 guidance, entailing revenue of $1.220 billion-$1.226 billion or a growth of 25.8% at the midpoint compared to prior expectations of $1.208 billion-$1.221 billion or an increase of 24.9% at the midpoint.

MNDY Price Action: Monday.com stock is trading up by 3.63% to $289.29 at publication on Tuesday.

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