What happened
Monday.com (MNDY 2.81%) stock gained ground today following the publication of the company's second-quarter results. The software specialist's share price closed out daily trading up 8.5%, according to data from S&P Global Market Intelligence.
Monday.com published Q2 results before the market opened this morning and posted sales and earnings results for the period that came in far ahead of the market's expectations. The company recorded non-GAAP (generally accepted accounting principles) adjusted earnings of $0.41 per share on revenue of $175.7 million, while the average analyst estimate had guided for per-share earnings of $0.21 on sales of $169.3 million.
So what
Monday.com provides software that makes it possible for business customers to build, deploy, and update workplace applications even if creators have very little coding knowledge. The low-code software specialist is seeing strong demand for its services, and revenue climbed 42% year over year in its second quarter.
Monday.com continued to add customers at an encouraging clip, with its total number of customers generating at least $50,000 in annual recurring revenue rising 63% year over year to reach 1,892. The Tel Aviv-based company also posted net revenue retention of 110% in the period, which means existing customers increased their spending by 10% compared to Q2 2022.
Even better, its net revenue retention rate for customers with at least 10 users was 120%, and net revenue retention among customers generating at least $50,000 in annual recurring revenue also came in above 120%. These last two stats are a strong indication that use of the Monday.com's services is scaling nicely among larger clients.
Now what
In addition to recording strong Q2 results, Monday.com's forward guidance also beat the market's expectations. For the third quarter, the company expects to post sales between $181 million and $183 million, representing growth of 33% year over year at the midpoint of the target range. Adjusted operating income is expected to be between $4 million and $6 million on an operating margin between 2% and 3%.
For the full-year period, management is guiding for sales to be between $713 million and $717 million -- good for growth of 37.5% annually at the midpoint of the target range. Meanwhile, the company expects to post adjusted operating income between $24 million and $28 million on an operating margin between 3% and 4%.
