Monday.com plunges despite beating analysts, raising guidance

The assessment on the market is that the reason for the sell-off is profit taking, after a 73% rise in the share price in the year to date.

The share price of Tel Aviv-based Monday.com (Nasdaq: MNDY) fell by about 20% after the company released its third quarter results today, despite the fact that it beat market estimates and raised its annual guidance. The share price has since recovered somewhat, and is currently down by about 15.5% at $274.13, giving the company a market cap of $13.7 billion. The assessment on the market is that the reason for the decline is profit taking. Until today, the share price had risen 73% for the year to date, and outperformed the market.

Monday.com, headed jointly by its co-founders Eran Zinman and Roy Mann, has developed an enterprise operating system to assist in the management of work processes. In the third quarter, the company recorded revenue of $251 million, 32.7% more than in the corresponding quarter of 2023, and above its guidance of $243-247 million. For the first nine months of this year, revenue is 33.6% ahead of the corresponding period of 2023, at $704 million.

On a GAAP basis, Monday.com posted an operating loss of $27.4 million and a net loss of $12 million in the third quarter. In the corresponding quarter, both figures were positive. For the first nine months of this year, the company posted a net profit of $9.4 million.

On a non-GAAP basis, net profit was $45 million for the third quarter and $126 million for the first nine months, giving earnings per share of $0.85 and $2.41 respectively, higher than the consensus analysts’ estimate.

Guidance raised

Monday.com has again raised its guidance, and now expects revenue of $964-966 million for 2024, 32% more than in 2023. The previous revenue guidance was $956-961 million. On a non-GAAP basis, the company projects an operating profit of $121-123 million, giving an operating margin of 12-13%. The previous guidance was $100-105 million and an operating margin of 10-11%. The guidance for free cash flow for the year has been raised from $270-275 million to $286-289 million.

"Monday.com had a strong third quarter, driven by the team’s consistent execution as we focus on deepening our product capabilities and bolstering the platform to support customers of all sizes," Mann and Zinman said. "Reaching $1 billion in ARR marks a major milestone in our journey as a company, and we are more excited than ever to enter this next stage of growth, building on the strong foundation we’ve established."

Published by Globes, Israel business news - en.globes.co.il - on November 11, 2024.

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