What Happened:
Shares of project management software maker Monday.com (NASDAQ:MNDY) jumped 12.1% in the pre-market session after the company reported a "beat and raise" quarter. First-quarter results exceeded analysts' expectations for revenue, gross margin, operating income, free cash flow, and earnings per share. Revenue guidance for the next quarter and full year also came in above Consensus, with the company raising the full-year guidance. Adding to the improved cash position, Monday.com enhanced its profitability with non-GAAP operating income at near break even. Likewise, the operating income margin guidance for the full year showed expectations of near break even. Management highlighted the continued focus on profitability, adding that "the monday.com team is off to a strong start in 2023, with our results reflecting increasing customer demand for our Work OS platform and product suite, as well as our ongoing commitment to improving efficiency and profitability." The Q1 results were strong, with solid revenue growth and improved margins and cash position. Overall, it was a standout quarter compared to the mixed results from other tech companies, and this should cause investors to raise their projections.
What is the market telling us:
Monday.com's shares are very volatile and over the last year have had 72 moves greater than 5%. But moves this big are very rare even for Monday.com and that is indicating to us that this news had a significant impact on the market's perception of the business. The previous big move was 21 days ago, when the company dropped 5.86% on the news that big tech companies that account for a significant portion of the major indices are set to report earnings this week, creating uncertainty and anxiety in the market. Meta, Microsoft, Alphabet, and Amazon are some of the key names to watch. The market is wary of uncertainty, and any negative surprises by these tech behemoths could trigger a sell-off and dampen the mood for the rest of the season.
Monday.com is up 23.9% since the beginning of the year, but at $147.70 per share it is still trading 13.1% below its 52-week high of $170 from February 2023. Investors who bought $1,000 worth of Monday.com's shares at the IPO in June 2021 would now be looking at an investment worth $827.41.
Is now the time to buy Monday.com? Access our full analysis of the earnings results here, it's free.