Monday.com (NASDAQ:) delivered a stellar performance in the second quarter of 2024, showcasing impressive year-over-year revenue growth and attaining GAAP operating profitability for the first time.

The company’s Q2 2024 revenue surged to $236.1 million, marking a remarkable 34% increase from the same period last year. This growth can be attributed to Monday.com’s strategic investments in innovation and platform scaling, resonating well with its expanding customer base.

In terms of profitability, Monday.com reported a GAAP operating income of $1.8 million, a significant improvement from a loss of $12.2 million in Q2 2023. The GAAP operating margin also turned positive to 1% from a negative 7% in the previous year.

On a non-GAAP basis, the operating income soared to $38.4 million, up from $16.6 million last year, with a non-GAAP operating margin of 16%, compared to 9% in the same period last year.

Monday.com’s robust performance amidst challenging macroeconomic conditions showcases its efficient execution and strong market demand.

The company also achieved a major milestone by securing an 80,000-seat agreement with a multinational healthcare company, marking its largest deal to date. This deal underscores Monday.com’s ability to handle large-scale enterprise needs and signals its focus on expanding upmarket.

The net cash provided by operating activities was $55.8 million, with free cash flow amounting to $50.8 million, further highlighting the company’s solid financial health.

Monday.com Exceeds Expectations in Q2 2024

Monday.com outperformed market estimates significantly in Q2 2024. Analysts had projected an EPS of $0.56 and revenue of $229.04 million for the quarter. However, the company reported a non-GAAP diluted net income per share of $0.94 and revenue of $236.1 million.

The actual EPS on a GAAP basis was $0.27, compared to a net loss per share of $0.15 in the same period last year. This strong performance showcases Monday.com’s ability to surpass market anticipations and highlights the effectiveness of its business strategies and operational efficiencies.

The company’s impressive 34% revenue growth year-over-year is particularly notable given the challenging economic environment for tech companies. This growth was driven by increased paid customers and higher ARR from existing customers, indicating strong customer retention and upsell capabilities.

Moreover, Monday.com maintained a robust net dollar retention rate of 110%, with higher retention rates for customers with more than 10 users and those generating significant ARR.

Positive Guidance for the Future

Looking ahead, Monday.com provided optimistic guidance for Q3 2024 and the full fiscal year. The company expects total revenue for Q3 to range from $243 million to $247 million, representing a year-over-year growth of 28% to 31%. The non-GAAP operating income is projected to be between $19 million and $23 million, with an operating margin of 8% to 9%.

For the full year 2024, Monday.com anticipates revenue between $956 million and $961 million, indicating a year-over-year growth of 31% to 32%. The non-GAAP operating income is expected to be in the range of $100 million to $105 million, with an operating margin of 10% to 11%.

The projected free cash flow for the year is between $270 million and $275 million, with a free cash flow margin of 28% to 29%.

Analysis:

Monday.com’s impressive performance in Q2 2024 demonstrates its resilience and growth potential in a challenging economic landscape. The company’s focus on innovation, customer expansion, and operational efficiency has translated into significant revenue growth and profitability. This positive trajectory bodes well for investors and indicates a strong future outlook for Monday.com as it continues to expand its market presence and deliver value to its customers.

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