Markets are heading south today with the Dow Jones Industrial Average and the S&P 500 sinking slightly, but there's no confusion about investors' bearish attitudes toward Monday.com (MNDY -29.95%). The company reported second-quarter 2025 financial results this morning, and investors seem concerned about what lies on the horizon for the cloud-based collaborative platform provider.
As of 11:06 a.m. ET, shares of Monday.com are down 26.8%.
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Despite bright spots in the earnings report, investors sense clouds on the horizon
Beating on both top and bottom lines, Monday.com reported Q2 2025 revenue of $299 million and diluted earnings per share (EPS) of $1.09. Analysts had expected the company to report sales of $293.6 million and EPS $0.86.
Investors, however, seem to be concerned about the guidance management issued. For one thing, the company projects 2024 sales of $1.22 billion to $1.23 billion, representing year-over-year growth of about 26%. Should the company achieve this guidance, it would represent a notable slackening of revenue growth. In 2024 and 2023, the company reported year-over-year revenue growth of 33.2% and 40.7%, respectively.
Similarly, investors are concerned about Monday.com's cash-flow prospects. Management projects 2025 adjusted free cash flow of $320 to $326 million, representing an adjusted free-cash-flow margin of about 26% to 27% -- a slimmer margin than the 30% adjusted free-cash-flow margin it generated in 2024 and the 28% adjusted free-cash-flow margin it posted in 2023.
Are investors right to ring the alarm bells now?
While the 2025 forecast may be disappointing investors, it seems the market is overreacting. If the company achieves its 2025 guidance, it will still represent strong revenue growth and free-cash-flow margin. For those looking for a time to pick up shares of tech stock Monday.com, today is a great buying opportunity.
