The past six months have been a windfall for monday.com’s shareholders. The company’s stock price has jumped 47%, hitting $99.78 per share. This run-up might have investors contemplating their next move.
Following the strength, is MNDY a buy right now? Or is the market overestimating its value? Find out in our full research report, it’s free.
Why Is monday.com a Good Business?
With its colorful interface of boards, columns, and automation that replaced the chaos of spreadsheets, monday.com (NASDAQ:MNDY) is a cloud-based work operating system that helps teams manage projects, track tasks, and streamline workflows through customizable interfaces.
1. ARR Surges as Recurring Revenue Flows In
While reported revenue for a software company can include low-margin items like implementation fees, annual recurring revenue (ARR) is a sum of the next 12 months of contracted revenue purely from software subscriptions, or the high-margin, predictable revenue streams that make SaaS businesses so valuable.
monday.com’s ARR punched in at $1.46 billion in Q2, and over the last four quarters, its year-on-year growth averaged 24.3%. This performance was fantastic and shows that customers are willing to take multi-year bets on the company’s technology. Its growth also makes monday.com a more predictable business, a tailwind for its valuation as investors typically prefer businesses with recurring revenue.
2. Elite Gross Margin Powers Best-In-Class Business Model
What makes the software-as-a-service model so attractive is that once the software is developed, it usually doesn’t cost much to provide it as an ongoing service. These minimal costs can include servers, licenses, and certain personnel.
monday.com’s gross margin is one of the best in the software sector, an output of its asset-lite business model and strong pricing power. It also enables the company to fund large investments in new products and sales during periods of rapid growth to achieve outsized profits at scale. As you can see below, it averaged an elite 88.7% gross margin over the last year. Said differently, roughly $88.74 was left to spend on selling, marketing, and R&D for every $100 in revenue.
The market not only cares about gross margin levels but also how they change over time because expansion creates firepower for profitability and free cash generation. monday.com has seen gross margins decline by 0.5 percentage points over the last 2 years, which is slightly worse than average for software.
3. Customer Acquisition Costs Are Recovered in Record Time
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
monday.com is quite efficient at acquiring new customers, and its CAC payback period checked in at 34.2 months this quarter. The company’s rapid recovery of its customer acquisition costs indicates it has a strong brand reputation, giving it more resources to pursue new product initiatives while maintaining the flexibility to increase its sales and marketing investments.
Final Judgment
These are just a few reasons monday.com is a high-quality business worth owning, and after the recent rally, the stock trades at 2.6× forward price-to-sales (or $99.78 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More Than monday.com
ONE MORE THING: Top 6 Stocks for This Week. This market is separating quality stocks from expensive ones fast. AI is taking down whole sectors with no warning. In a rotation this fast, you need more than a list of good companies.
Our AI system flagged Palantir before it ran 1,662% between October 2022 and February 2026. AppLovin before it ran 753% between February 2024 and February 2026. Nvidia before it ran 1,178% between January 2023 and February 2026. Each week it produces 6 new names that pass the same tests. Get Our Top 6 Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.