monday.com shares surged 20% on Wednesday as the project management software company’s first quarter earnings and raised full-year revenue guidance impressed.
For Q1, revenue grew 34% year-over-year to $216.9 million, beating the high end of guidance by 2.8% and ahead of Street estimates of $210.6 million.
The company posted adjusted earnings per share of $0.61, ahead of the $0.40 expected by analysts.
Additionally, it raised its full-year revenue guidance by 2% or $16 million to a range of $942 million to $948 million, representing growth of 29% to 30%.
This is approaching the $953 million expected by analysts at Jefferies, representing 31% year-over-year growth. “We expect monday.com to hit or beat when the year is over,” they wrote.
The analysts reiterated their ‘Buy’ rating on monday.com and upped their price target to $270 from $250. Shares of monday.com traded hands up 20% to about $216 on Wednesday afternoon.
The analysts noted that monday.com’s Q1 revenue beat was driven by its strong performance with both small and medium businesses and enterprises, which contrasted with macro softness elsewhere in the software space.
It is executing well on the move-up market, the sale of add-on products and AI innovation, with new features including AI-automated templates, workflows, and columns, the analysts wrote.
“Strong execution also led to free cash flow margin jumping to 41% from 27% in Q4 and financial year 2024 free cash flow guide raise by 19% or $38 million,” they wrote.
“Although the macro is still choppy, monday.com is working toward its platform ambitions while delivering on both short-term and long-term targets.”
The company’s 2Q guide looks “conservative as usual,” the analysts highlighted.
At the midpoint, monday.com projects Q2 revenue of $228, above Street estimates of $225.2 million.
“Q2 revenue guide at the midpoint implies 5% quarter-over-quarter growth versus 7% to 11% in the last seven quarters,” the analysts wrote.