MNDY — monday.com Ltd.

Summary of monday.com Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $351 million, up 24% year-over-year.
• Operating Profit: $49 million, an increase from $40.8 million in Q1 2025.
• Net Income: $56 million, compared to $58.4 million in the prior year.
• Adjusted Free Cash Flow: $102.8 million, with a margin of 29%.
• Gross Margin: 89%, slightly down from 90% year-over-year.
• Net Dollar Retention (NDR): 110% in Q1, with expectations for a slight decline by year-end.
• Employee Headcount: 3,211, with a flat outlook for the remainder of FY 2026.

2. Strategic Updates and Business Highlights

• AI Integration: Approximately 10% of new ARR in Q1 was driven by AI products, with expectations for growth as AI offerings mature.
• New Pricing Model: Introduction of a "seats plus credits" pricing structure aimed at aligning costs with AI usage, allowing for consumption-based billing.
• Acquisition of One AI: Enhances monday.com’s capabilities with native voice functionalities.
• Enterprise Growth: 42% of ARR now comes from customers with over $50,000 in ARR, with a record number of new customers exceeding $500,000 in ARR.

3. Forward Guidance and Outlook

• Q2 Revenue Guidance: Expected between $354 million and $356 million, representing 18% to 19% year-over-year growth.
• Full Year 2026 Revenue Guidance: Projected between $1.466 billion and $1.475 billion, indicating 19% to 20% growth.
• Operating Income Guidance: For the full year, expected to be between $185 million and $191 million, with an operating margin around 13%.

4. Bad News, Challenges, or Points of Concern

• NDR Outlook: While gross retention is at historical highs, a slight decline in NDR is anticipated due to lapping previous pricing actions.
• FX Impact: Approximately 190 basis points negative impact on operating margin due to currency fluctuations, particularly from the appreciation of the Israeli shekel.
• Top of Funnel Demand: Remains soft, with cautious management of performance marketing.
• AI Costs: Increased computing costs related to AI may pressure gross margins, which are expected to stabilize in the mid-80s.

5. Notable Q&A Insights

• Customer Reception to New Pricing: Customers are seeking transparency and control over AI credit usage, which is being integrated into the platform.
• Performance Marketing Shift: The transition to targeting upmarket customers is ongoing, with expectations for improved performance in the future.
• Adoption of AI Products: Current revenue from AI does not yet include contributions from newly released agent products, indicating potential for future growth.
• Enterprise Customer Migration: Existing customers will have the option to opt into the new pricing model without significant disruption.

Overall, monday.com reported a solid start to 2026, driven by strong revenue growth and strategic shifts towards AI integration, despite facing some challenges related to currency fluctuations and market demand.