Monday.com Stock Falls 26.8% Amid Disappointing 2025 Revenue and Free-Cash-Flow Forecasts.

Monday.com reported Q2 2025 revenue of $299 million, beating analysts' estimates. However, investors are concerned about the company's 2025 revenue and free-cash-flow forecasts, which were lower than expected. Shares are down 26.8% as a result. Despite this, the company still reported strong revenue growth and free-cash-flow margin in 2024 and 2023.

Project management software maker Monday.com (NASDAQ: MNDY) reported its Q2 2025 results, showcasing robust revenue growth that exceeded analysts' expectations. The company's revenue for the quarter stood at $299 million, a 26.6% year-on-year increase, surpassing the market's estimates of $293.7 million [1]. This performance was driven by a 27% beat in adjusted earnings per share (EPS) to $1.09, compared to analysts' consensus of $0.86.

However, despite these positive earnings, investors have reacted negatively to Monday.com's 2025 revenue and free-cash-flow forecasts. The company expects 2025 revenue to range between $1.22 billion and $1.23 billion, representing a notable slowdown from the previous year's growth rates of 33.2% in 2024 and 40.7% in 2023. Additionally, the projected 2025 adjusted free-cash-flow margin of 26% to 27% is lower than the 30% margin in 2024 and 28% in 2023, causing concern among investors [1].

Shares of Monday.com have dropped by 26.8% since the announcement, reflecting the market's discontent with the company's forward-looking guidance. Despite the negative reaction, it is essential to note that Monday.com's performance in the past two years has been strong, with significant revenue growth and free-cash-flow margins.

Looking ahead, Monday.com's strategy is focused on continued enterprise expansion, acceleration of AI-powered platform features, and targeted executive hires. The company has rolled out three new AI capabilities—monday magic, monday vibe, and monday sidekick—that have seen strong traction, with 46 million AI-driven actions since their launch. Additionally, Monday CRM has reached $100 million in annual recurring revenue, indicating rising demand for flexible, customizable customer relationship management tools [1].

However, the company has acknowledged challenges in acquiring smaller customers, particularly due to changes in Google search algorithms. Management is reallocating resources to more efficient channels and expects these impacts to be temporary. The company's multi-product approach and executive leadership changes aim to drive upmarket growth and customer retention.

In conclusion, while Monday.com's Q2 2025 results were strong, investors are concerned about the company's 2025 forecasts. The company's future performance will depend on its ability to monetize AI-driven features, accelerate sales efficiency, and manage evolving digital marketing dynamics. For investors, the key will be monitoring Monday.com's execution in these areas and the pace of recovery in small business customer acquisition.

References:
[1] https://finance.yahoo.com/news/mndy-q2-deep-dive-ai-053144046.html
[2] https://finance.yahoo.com/news/why-monday-com-stock-plunged-160654072.html