Monday.com shares plunge as rising R&D costs push it back to a loss
Despite beating revenue estimates, the company expects further profit declines this quarter.
Monday.com shares fell by over 25% on Monday after the company released second-quarter results showing a decline in profitability and a return to an operating loss. Although the company beat market expectations, it forecast a continued decline in profitability in the current quarter.
Revenue in the quarter totaled $299 million, up 27% from the same period last year and above analysts’ expectations of $293.6 million.
However, a sharp rise in development expenses, from $50 million in Q2 2024 to $87 million in the latest quarter, pushed the company to an operating loss of $11.6 million. By comparison, Monday posted an operating profit of $1.8 million in the same quarter last year, matching its profit in the previous quarter.
Excluding accounting items, operating profit was $45.1 million, compared with $38.4 million in the same period last year, though the operating margin slipped slightly to 15%.
Net income was just $1.5 million, supported by interest income. Operations generated $66.8 million in net cash flow, up from $55.8 million a year ago. Adjusted earnings came in at $1.09 per share, beating analysts’ forecasts of $0.86 per share.
For the third quarter, Monday projects continued margin pressure, with operating profit expected to fall to $34–36 million despite revenue growth of 24–25% to about $313 million.
The company reaffirmed its 2025 outlook for revenue of about $1.2 billion but narrowed its operating profit forecast to $154–158 million before one-time items.
On a brighter note, Monday reported that annual recurring revenue from its CRM products has reached $100 million, just three years after the offering was launched.
