MNDY Q2 2025: H2 Guidance at Mid-20s% Amid Enterprise Momentum
- Strong Enterprise Momentum: The call highlighted record net new enterprise customer adds (customers paying over $100K annually) and the milestone of Monday CRM reaching $100,000,000 ARR, underscoring robust high-value customer acquisition that can drive sustainable revenue growth.
- Innovative AI Capabilities with Monetization Upside: Management emphasized the launch of new AI-driven products (Monday Magic, Monday Vibe, and Monday Sidekick) and noted sequential growth in AI actions by nearly $20,000,000 this quarter, pointing to significant future monetization potential.
- Resilient Marketing and Financial Discipline: Despite minor headwinds from Google SEO changes, the team has effectively reallocated marketing spend across diversified channels and maintained a stable NDR of 111%, reflecting strong cost optimization and operational resilience.
- Pressure on lower-end customer acquisition: There is concern that Google algorithm changes are dampening performance marketing effectiveness, potentially impacting the overall volume of new customer adds in the lower-tier segment.
- Margin compression from high headcount growth: With an expected 30% headcount increase this fiscal year, heavy investments in sales, R&D, and product expansion could pressure margins if revenue growth does not accelerate accordingly.
- Uncertainty in AI monetization: While AI usage and actions are growing, the sequential slow-down in AI action growth and reliance on evolving credit usage models introduces uncertainty about the timing and scale of future revenue from AI-related offerings.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue | Q3 2025 | no prior guidance | $311,000,000 to $313,000,000 | no prior guidance |
Non-GAAP Operating Income | Q3 2025 | no prior guidance | $34,000,000 to $36,000,000 | no prior guidance |
Operating Margin | Q3 2025 | no prior guidance | 11% to 12% | no prior guidance |
Revenue | FY 2025 | $1.220B to $1.226B, 25%-26% YoY | $1,224,000,000 to $1,229,000,000, 26% YoY | raised |
Non-GAAP Operating Income | FY 2025 | $144M to $150M | $154M to $158M | raised |
Operating Margin | FY 2025 | approximately 12% | approximately 13% | raised |
Adjusted Free Cash Flow | FY 2025 | $310M to $360M | $320,000,000 to $326,000,000 | lowered |
Adjusted Free Cash Flow Margin | FY 2025 | 25% to 26% | 26% to 27% | raised |
Net Dollar Retention Rate | FY 2025 | no prior guidance | 111% | no prior guidance |
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Revenue Guidance
Q: How did guidance change from original expectations?
A: Management explained that updating H2 growth to the mid-20s% reflects cautious assumptions around Google search impacts, a slower headcount ramp, and steady product investment, ensuring guidance remains both prudent and achievable. -
AI Growth
Q: How did AI usage and monetization perform?
A: The team highlighted nearly $20M of AI actions growth this quarter, with new features like Magic, Vibe, and Sidekick driving increased customer adoption and setting the stage for stronger monetization next year. -
SEO Impact
Q: What effect did Google changes have on new acquisitions?
A: Management noted that while lower-tier volume dipped slightly due to Google’s algorithm experiments, high-quality customer engagement and overall conversion remained solid, with ongoing daily optimizations mitigating any impact. -
Enterprise Momentum
Q: How is enterprise business performance evolving?
A: Leaders emphasized record enterprise customer adds—specifically customers above $100K annual revenue—and a strengthened sales force through key executive hires, driving a stable 111% NDR and a move toward higher value deals. -
CRM Growth
Q: What drove CRM ARR to a $100M milestone?
A: The company’s CRM growth was fueled by significant seat expansion and larger deal sizes—reflected in over 20% ACV year-over-year increase—underscoring its successful upmarket transition and enhanced customer engagement. -
Capital Allocation
Q: How will surplus cash be utilized?
A: Management stressed that the focus remains on organic growth via product and sales investments while they stay open to selective M&A opportunities, with no immediate plans for buybacks, preserving flexibility for future opportunities.
Research analysts covering monday.com.