Monday.com Earnings Smash Estimates. Why the Stock Is Tumbling 26%.

Monday. com beat second-quarter earnings estimates. (Nitzan Keynan / Monday.com)

Monday.com posted better-than-expected financial results and hiked its full-year revenue guidance, boosted by stronger software demand. But the stock was tumbling in Monday trading.

The disappointment appeared to come from the company’s revenue forecast. It sees a range between $311 million and $313 million for the third quarter. Wall Street was looking for $313 million.

Monday.com boosted its outlook for full-year revenue. The company now expects 2025 revenue between $1.224 billion and $1.229 billion, up from its previous range of $1.22 billion to $1.226 billion. Analysts had expected 2025 revenue of $1.224 billion.

William Blair analyst Arjun Bhatia noted that Monday.com’s $3.5 million hike to full-year revenue guidance was less than the second-quarter beat, “implying a more conservative growth outlook for the back half of the year.”

“This dynamic, along with the lower than typical beat, is likely pressuring shares in the premarket,” Bhatia, who has an Outperform rating on the stock, added.

Shares sank 26% to $182.67 on Monday. The stock is now down 23% this year.

On top of a disappointing outlook, Monday.com executives spoke to problems the company has seen due to changes in Google search.

“We are seeing some softness within the downmarket due to the changes in the Google algorithm but this is temporary, we believe, and we are already taking actions proactively to address this,” management said on the earnings call Monday morning.

Barron’s has previously reported that the changes Alphabet’s Google has made, including the introduction of AI overviews—answers generated by artificial intelligence that appear on the top of Google search pages— have changed the way people search.

“High-quality customers still click on Google and ads. If you’re looking for a solution such as a CRM or project management, you’re going to reach us,” management said. “So, the drop that we see is just on volume because they are experimenting with AI on top, and it’s not that significant for the higher quality of customers.”

Essentially, Monday.com says that fewer people are clicking on their website from Google search, but the people who do click want information about the company and its services.

Monday.com posted second-quarter adjusted earnings of $1.09 a share on revenue of $299 million. Analysts surveyed by FactSet were expecting earnings of 86 cents a share on revenue of $294 million.

In the same period last year, the company reported earnings of 94 cents a share on revenue of $236 million.

“In a volatile market, businesses are prioritizing efficiency, and that’s where Monday.com delivers,” CFO Eliran Glazer told Barron’s.

The economic environment remains uncertain as President Donald Trump’s tariffs take effect. There have been concerns that companies might pull back their IT spending budgets to mitigate the higher costs to import goods. Instead, several software companies—including ServiceNow and Microsoft —have reported strong revenue growth as enterprises invest in products that are meant to improve efficiency and productivity.

“We see uncertainty as an opportunity. We’re leaning in and continuing to invest in scaling our offering to further our mission to transform the way businesses run,” Glazer said.

Write to Angela Palumbo at angela.palumbo@dowjones.com