Monday.com Shares Fall in Pre-Market Despite Q3 Beat and Raised Outlook
Monday.com shares fell in pre-market trading despite beating Q3 expectations with $378 million in revenue and raising its annual guidance. The software firm navigates an AI-driven pivot amid broader SaaS market pressures.
Monday.com shares tumbled in pre-market trading despite the software company beating analyst expectations and raising its full-year guidance. Co-founders and CEOs Roy Mann and Eran Zinman noted that Monday.com has taken significant steps to transition into an AI-first company, acknowledging that such a large-scale transformation involves near-term operational challenges. The company reported a 19% revenue increase in the third quarter to approximately $378 million, with GAAP operating income reaching $31.2 million compared to an operating loss in the same period last year.
Net income on a GAAP basis stood at $35.2 million, marking a 170% surge year-over-year, while Non-GAAP net income climbed 51.2% to $93.6 million. Diluted earnings per share reached $2.14, significantly outperforming the consensus estimate of $1.37. The firm reported that enterprise customers generating over $100,000 in annual recurring revenue now represent 31% of total ARR, up from 27% a year prior. ARR from artificial intelligence products reached $36 million by the end of the third quarter, with proprietary AI agents surpassing 6 million interactions in under two quarters.
Year-to-Date Performance and Guidance
Total revenue for the first nine months surpassed the $1 billion milestone, reaching approximately $1.1 billion, representing a 21.7% growth rate. Net income totaled $66.7 million, or $215 million on a Non-GAAP basis, translating to $4.70 per share. Free cash flow stood at $168 million, while adjusted free cash flow reached $218 million after excluding restructuring costs related to workforce reductions.
Chief Financial Officer Eliran Glazer emphasized that the quarterly results reflect meticulous financial management focused on profitability alongside ongoing investments in enterprise sales, product development, and artificial intelligence. Looking ahead, Monday.com projects full-year revenue between $1.473 billion and $1.475 billion, reflecting 20% growth, with Non-GAAP operating income expected to reach $268 million to $270 million.
