Q3 2025 monday.com Ltd Earnings Call

Today my name is Eric and I'll be your conference operator. Today at this time I would like to welcome everyone to monday.com third quarter fiscal year 2025 earnings conference call.

I would like to turn the call over to monday.com vice president of investor relations Mr. Byron Steven.

Please go ahead.

Hello everyone, and thank you for joining us. On today's conference call to discuss the financial results for monday.com third quarter, fiscal year 2025.

Joining me today are Roy Mann and Aeron zimman, Co a monday.com, Ella Ron, Glaser monday.com CFO, and Casey, George monday.com cro.

We release our results for the third quarter fiscal year 2025 earlier today.

You can find our quarterly shareholder letter along with our investor presentation, and a replay of today's webcast under the news and events section of our IR website at IR, monday.com certain statements made on the call. Today will be forward-looking statements which reflect Management's best judgment based on currently available information.

These statements involve risks and uncertainties that may cause actual results to differ from our expectations.

Please refer to our earnings release for more information on the specific factors that could cause actual results to differ materially from a forward-looking statements,

Additionally, non-gaap Financial measures will be discussed on the call.

Reconciliations to our most directly comparable, gaap, Financial measures are available in the earnings release, and the earnings presentation, for today's call, which are posted on our investor relations website. Now, let me turn the call over to Roy.

Thank you, Byron. And thank you everyone for joining us today. In Q3, we delivered another quarter of strong results and disciplined execution, putting us firmly on track toward our Investor Day revenue target of $1.8 billion for FY 27. We saw our best net additions of over 100K plus and 500K plus paying customers, reflecting the strength of our go-to-market engine and the expanding demand for our platform. We also reported our largest-ever non-GAAP operating profit, reinforcing our ability to scale efficiently while continuing to invest in innovation.

The combination of accelerating customer expansion, record profitability, and surging engagement with our AI offering positions monday.com strongly for its next phase of growth. Our Q3 results follow a highly successful Investor Day, where we showcased our revolution into a multi-product and AI-powered platform.

The event Drew nearly 1,000 online, participants over 4 times. The viewership from 2023 reinforcing investor confidence in our vision and the significant opportunity ahead as we execute toward our FY 27 goals. Additionally, our Elevate user conference in New York City and London, reach New Heights, in both scale and impact attendance more than doubled year-over-year reflecting. Our growing excitement around our platform and the new AI capabilities, these events, not only Amplified, customer enthusiasm and engagement, but also generated record engagement and strong pipelines heading into 2026.

Setting the stage for continued customer expansion and growth.

Highlights for the quarter.

Thank you, Roy.

The Investments we've made in our sales organization over the past year, continue to drive strong results.

We deliver solid, net additions among larger customers. So improved, net dollar retention for accounts over 50k in ARR and Achieve accelerating RPO growth. All reinforcing the effectiveness of our up Market strategy, and discipline, execution,

We continue to rebalance. Our go to market Investments towards mid-funnel channels. The target larger opportunities.

While these motions come with longer sales Cycles, there are yielding higher quality Pipeline and position us well for sustainable growth.

Moving on a multi-product strategy is delivering strong results. Expanding money.com reached across more teams and use cases.

New product. Now, accounts for over 10% of total ARR surpassing our 2025 goal ahead of schedule.

New bundle offering combining Work Management with CRM service and death. Provide a unified cost-efficient experience like accelerating cross. Sell momentum.

And within CRM, our new AI-powered money campaigns product has seen rapid adoption since the September launch, reinforcing our vision of a connected sales and marketing suite.

Since his gradual release in July Monday's Vibe, has seen rapid adoption with customers, creating more than 60,000 apps to part of their unique workflows.

Build directly on money.com Enterprise infrastructure. These apps are secure scalable and fully integrated with granular permissions and team contacts.

The better looks like the value customers are realizing. We introduced a new pricing model that lets users select the tier aligned with their AI needs.

From unlimited free access to build and test apps to pay tiers as the usage grows.

We also recently introduced agent, Factory a new AI product that lets anyone design and manage intelligent agents to automate complex, workflows.

operating as a standalone solution, with flexible consumption, based pricing these agents function as integrated team members handling tasks like updating CRM, records, sending emails, and scheduling follow-ups,

And to simplify the AI experience, we're rolling out a new AI credit system in Q4. Shaped by extensive customer feedback, this will provide a more transparent and intuitive way to scale AI usage and measure impact across organizations.

This quarter results, reflect the incredible dedication of our teams and the trust. Our customers place in monday.com every day with accelerating customer extension record, proof, stability, and growing enthusiasm for our AI Power Platform. We're entering the next phase of durable profitable growth that will create meaningful long-term value for shareholders.

With that, I'll now turn it over to eleron to cover our financial and guidance.

Thank you Ron. And thank you to everyone for joining our call.

Q3 was another strong quarter for monday.com, highlighted by solid revenue growth supported by our success with larger customers and continued improvement in operational efficiency.

Delta Revenue came in at 317 million up 26% from the year ago quarter.

Our overall ndr was 111% in Q3 we continue to expect overall ndr to be stable at 111% for fiscal year. 25. As a reminder, our ndr is trailing 4 quarters, weighted, average, calculation,

For the remainder of the financial metrics disclosed, unless otherwise noted, I will be referencing non-GAAP financial measures. We have provided your consolidation of GAAP to non-GAAP financials in our earnings release.

Third quarter, gross margin was 90% in the medium to long term. We continue to expect gross margin to be in their high 80s, range, research and development, expense was 57.8 million in Q3 or 18% of Revenue up from 17% in the year ago quarter.

sales and marketing expense was 151.8 million in Q3 or 48% of Revenue compared to 52% in the year ago quarter,

General and administrative expense was 27 million in Q3 or 9% of Revenue compared to 9% in the year ago quarter.

Operating income was a record of 47.5 million in Q3 up from 32.2 million from the year, go quarter and operating margin was 15%.

53.3 million fully diluted shares outstanding.

The total employee headcount was 3,018 employees, an increase of 151 employees since Q2. We continue to expect to grow headcount by approximately 30% in fiscal year 2025.

moving on to the balance sheet and cash flow. We ended the quarter with 1.53 billion in cash and cash equivalents down from 1.59 billion at the end of Q2.

Marketable Securities were 211.7 million at the end of Q3 up from 60.1 million at the end of Q2.

Adjusted free cash flow for Q3 was 92.3 million and adjusted free cash. Flow margin was 29%. Adjusted free cash. Flow margin is defined as adjusted free. Cash flow as a percentage of Revenue, a Justice free cash flow is defined as net cash from operating activities. Less cash is used for property and equipment and capitalized software costs plus cost associated with the buildout and expansion of our corporate headquarters.

Now, let's turn to our updated outlook for fiscal year 2025 for the fourth quarter of fiscal year 2025, we expect our Revenue to be in the range of 328 million, to 330. Million representing growth of 22% to 23% year-over-year. We expect non-gaap operating income of 36 million, to 38 million and an operating margin of 11% to 12%.

For the full year of 2025, we expect Revenue to be in the range of 1.

We expect fully a non-gaap operating income of 167 million to 169 million. In an operating margin of approximately 14% we expect fully adjusted free. Cash flow of 330 million to 334 million and adjusted free cash flow margin of approximately 27%. Let me now turn it over to the operator for your questions.

At this time, I would like to remind everyone that in order to ask a question, please press star, followed by the number 1 on your telephone keypad.

We ask that participants please limit themselves to 1 question 1. Follow-up question.

Your first question comes from the line of cash ranging with Goldman Sachs.

Please go ahead.

Hi, thank you very much. Uh, good to see the quarterly results, I'm also curious to get your perspective on 2 things 1, is as you look at these spending environmental counter, the next calendar year calendar. 26, what is top of mind for your customers and uh, work this Monday stand in terms of spending priority and also, secondly, when you look at the, the results just look like a smaller magnitude of beat relative to what we've come to expect of Monday in the past prior quarter. So if you could talk about the what what might be behind? The, the numbers that is the go to market transition, Etc, that hopefully,

Will set you up for a very good success in the years ahead. But, uh, I wonder if that the go to market transition, the pivot towards larger deals also causes the, the the kind of upside that we've come to expect in the results. And the, the guidance looking forward to the fourth quarter. And the year ahead, there's any go to market transition, uh, that we should be thinking about as you work through these numbers. Thank you so much.

Hey cash. Uh, this is Iran. Uh, maybe just to start, uh, before I start answering your question. Uh, I know this is your last call covering us. So just, uh, want to say thank you for the, uh, whole period and, and the coverage throughout the years, um, just to the first part of the question, and then I can the first everyone to go about guidance and Casey. Uh, so in terms of customer demand, uh, like you mentioned, we see a transition in the business, uh, basically across, uh, all all customer segments the 50k. 100K half a million. We see acceleration. Uh, our go to market strategy, uh, in terms of that in bigger accounts, uh, is working really well. And we see accelerating, uh, on all fronts in terms of what customers are asking for. So definitely, uh, we see an increase in terms of our across the ability, more customers are buying more products, definitely more and more customers are interested in AI features and AI products. And I think a lot of the new announcements and new features that we learned really resonates with customers. So overall, uh, this

We see a very healthy demand across all customer segments, we see healthy Demand with our existing products and, and specifically, with the new AI features, uh, that we offered. And we announced during the investor day.

Looks like Monday service CRM and PLT china, such as video and social media actually, providing higher Roi and uh, they tend to have a longer sales cycle, but we see a very positive momentum. When you look at the 50k, customers 100K, customers, 500k, customers, they're all accelerated, uh, in this quarter going into next year. So, this provides us a lot of confidence with regards to our next year, uh, assumptions. And maybe Casey you can add uh, you know what are top of Mind of customers next year? Yeah, we just finished up our world tour with Elevate. So, tens of thousands of customers and Partners came out to hear everything. We we had, uh, to offer especially around our AI offerings that the consensus back was, you know, I I'm not taking full advantage of Monday and obviously, when when we only have 6% of our customers consuming more than 1 product, the opportunity for us is significant. And so as we start this multi-product journey, uh which obviously is just begun all indic

Are we're going to have a much more material impact on the revenue associated with customers, consuming more than 1 product. So, at this point, it's early, but all signs and indications are that this is going to be uh, significant contribution for us going forward.

Thanks so much, and best wishes for the journey ahead.

Thanks Cash.

Your next question comes from the line of Jackson AER with KeyBanc Capital Markets.

Please go ahead.

Great. Uh, thanks for taking our questions. The first 1 that I had was on, um, the move up market and its impact on deferred revenue or billing.

As you guys keep signing on larger customers and maybe longer-term contracts, more heavily weighted toward annual and even multi-year, I would expect deferred revenue to have...

To outgrow, um, recognize revenue. And so, I'm just curious what the Dynamics are. There that, that are causing deferred revenue to come in below Revenue. Thank you.

Hey, hey, just as a reminder, uh, when you with regards to Billings, we said it in the past, this is not the perfect measurement of our business. Because it's based on a cash basis, not a cruel basis. As a reminder, we tend to be more conservative from that. So, therefore, there are some fluctuations with regards to that, and we think a better measurement of this, this is an RPO RPO is a new metric for us, uh, that we disclosed in the investor day. And as you can see, it's accelerating quarter of a quarter, and it's also reflects the full contract value that we see going up market. So we think there is going to be some timing, uh, of the bit.

Feelings. This is why it's not perfect measurement. Therefore we tend to see the RPO as a better measurement. Going into next year.

Okay, all right, great, that's fair. And then, um, what should we take, uh, from, you know, the implied growth rate here for the fourth quarter is like 20, 2 and a half 23% or so, uh, year-over-year growth, what should we take a signal? For the right? Level to be thinking about 2026.

Oh so we are going to um provide our initial expectation for fiscal year 20 26 in our next quarter earnings and I think in the investor that we provided uh a good out time. We said that we're going to be 1.8 billion by fiscal year 27 and we are committed uh to achieving this number and to the guy that we have provided during the investor day. So um, and this is something that uh not only we are growing on the revenue but also expecting operating and free cash flow margin to expand

Got it. Okay, thank you very much.

Your next question comes from the line of Arun Bhatia with William Blair.

Please go ahead.

Yes, perfect, thank you so much. Um, hey, I want to maybe just uh, just go back to the um, uh the fact that, you know, 26 might might see some improvement if given that you're rebalancing investment. Can you, can you just, um, maybe elaborate a little bit on where the investment is going? What you might expect? Uh, your your kind of goals are for 2026 to either Rexall rate growth and then, um, I think I heard you say 30% increase in headcount this year. I'm curious how your plans are shaping up for for 2026 within that investment. Uh, investment framework. Thank you.

Uh, it seems like a big stretch, but right now, the majority of the business is based on 50K 100K, uh, half a million dollar accounts. Uh, we see those accounts as much better retention. Uh, much more expansion, much more stability. Uh, definitely changes the nature of the business and and we see some of that, uh, as far as the results. But we're very confident on where we had in with those customers. We filled the potential to do more across sale more expansion over time, will really pay off in addition. Uh, as we mentioned, during the investor day, we do a lot of investment in terms of product. Uh, we're executing in the last 3 or 4 quarters, like never before adding a lot of AI features functionality, those are really well-received, uh, with our customer base. There's a lot of excitement, Casey mentioned Elevate, uh, we got great feedback from customer across the board. So all in all uh looking at all the Investments we made and all the innovation in the product. We feel very confident in where we had it and how our customers are are using product.

Um, hey, uh, our June. This is Alan. Just to answer, your question on headcount. So as we said, we expect hiring to remain focused on sales product, and R&D this year, um, we estimate it to be around 30% growth, in headcount, by the end of the year. And we think that, as for nectar and we already said that, uh, uh, in the investor day that we believe the numbers are going to be closer to 20% in terms of, um, adding additional account. Uh, it's going to start to decelerate already in H2 of this year, going into next year.

And we think the most of the investment already is behind us. So uh we're going to see less investment in headcount next year.

Okay, um, understood very helpful. Thank you. And then, um, 1 just on Vibe, um, because it seems like it's getting very good adoption. Um, 60,000 apps. I think. In a short number of months, what are customers building on on Monday Vibe and is that different from what you see them, how you've seen them historically, used sort of uh, the Monday Work Management platform.

Um, yeah. Hi, it's Roy here. So um

Vibe is amazing. Like we see that, customers are really leaning into it and it's filling up a lot of gaps and I feel like it's a product. It's it triggers their imagination. You know. Like whatever they want out of software they just like put in there and they build like stuff. We wouldn't have imagined like some of them we shared in the investor later a letter uh fill gaps. Build like the software of their dreams and it's all built on top of the Monday infrastructure. Meaning it's like Enterprise grade and the data is saved everything, they they uh, expect from the platform itself like they get into Vibe and some of them are leaning really hard into it.

Perfect, thank you so much.

Your next question comes from the line of Josh Bear with Morgan Stanley.

Please go ahead.

Great. Thanks for the question. I wanted to ask on the um product bundles that you're starting to introduce this quarter in Q4 um I guess first. Is there a change on the product side from a capabilities, or integration perspective? Or is it more about the go to market and and pricing and I guess to follow up is like what, you know, what is the change or here? Um is it effective discounts? Like what what's uh the goal here and and uh which parts of the market? Are you trying to Target with this? Thanks.

Yeah, at Casey George here. I'll take this 1. So, we just launched bundles. We launched 3 bundles here. This, uh, last month. So this quarter. Uh, we obviously have a lot of visibility in how can, uh, customers use our products and what we saw in the market, there were 3 in particular that

Stood out, where there was a pretty consistent use cases with work management and service CRM and Work Management.

And, uh, around our CRM and service.

And so what we did was we put those into the market, and there is some commercial advantage for the customer to consume those. But it's also ease of use because these are ready-built bundles that they can deploy very quickly and get value from them immediately. Again, we saw in particular industries where these were pretty pervasively used.

And therefore we uh we bundled them up, made them available to the market and our sales, team and early days. But we are seeing very good traction with these bundles, uh, here in the first, the first quarter since they've been launched

Okay, great. Thank you.

Your next question comes from line of Brent, Phil with Jeffries.

Please go ahead.

Thank you. Uh, just going back to the guidance. I don't think there's a time in our model where you didn't raise guidance.

On the quarter out. So I think many are are asking, you know, what, what's happening? What what are, what are the causes? Uh, for this? Obviously you see your stock pre-market and what's happening? So I think a little more explanation is needed to better understand what what what happened there?

Yeah. Hi Brent. It's Alan. Uh, so maybe as a reminder we we keep saying it every quarter it's important. Our guidance approach is consistent with power quarters. It hasn't changed and we didn't change the philosophy. As we said, uh, in power quarter, the more measured bit reflects timing effects as we rebalance Investments towards Roi, um, areas. So we are, uh, investing in Performance Marketing where we see the return on investment and due to our big brain capabilities. When we see our returns, we are investing in Performance Marketing and we see them into the dollars as we started to shift our up Market. Obviously, there is a timing effect because the investment is taking longer to see the results. However, the momentum and the trends are very positive. So there is a timing effect. As I mentioned that growing into uh, the next quarters and this impacting, the numbers that we are seeing this year in terms of Revenue and now

Okay. And uh you know from from Casey's uh approach. I know it's it's still earning early in his journey, but I think many are asking how how that transition is going up Market. What what's, what's still needed to go? What's what's going? Well,

I think everyone loves to hear his thoughts.

Yeah, no, thank you. It is going exceptionally. Well, if I point you back to the the key metrics that we follow around moving up Market the 50 100K, 250 and 500 k.

Um, we accelerated all of those, and why, you may ask yourself, is that important?

Uh, if you understand that the first deal is is typically a $50,000 deal, not a million dollar deal. Um and it starts at the 50 goes to 250 and then accelerates into hopefully a a 7-figure deal, we're seeing that Trend continue. I'll point to you know, 3 big wins. We had in the in the quarter all over a million. All all 3 of those started 3 or 4 years ago at probably around 50,000 and the accelerated over the the course of the 3 4 years, um, love to talk about a couple of those opportunities in particularly

Uh, 1 of them. Large logistics company in Europe.

Uh, that is consuming 5000 seats, 1500 of of those are CRM. Uh, we obviously have work management and then there's service seats associated with that wind. So, here's a large logistics company. That's consuming 5,000 seats across 3 of our products, uh, that was over a million this quarter. We had a large tech company that uses our product across about 10 different departments, um, most, uh, most, uh, importantly, they use it to manage all of their m&a.

And uh, that's another company that started with us. You know, 3, 4 years ago around 50,000. So all of the metrics that we follow uh, are accelerating and obviously encouraging signs for our ability to to move up Market.

Okay, thank you.

Your next question comes from the line of Mark Murphy with JP Morgan. Please go ahead.

Uh, thank you very much. The the metrics are clearly strong with your larger customers. Can you speak to what you saw in mid-market? Uh, and below? For instance, how did that? How did the down Market business Trend versus internal plans, or, you know, is, is there much of a spread in the growth rate there? What if we compare it to that over 100k cohort?

Yeah. Hi Mark. Uh, this is ironic in store. So uh look, you know, looking at Q3 uh double funnel transfer were choppy overall. Uh we we saw some continued volatility in Page, search performance. However, the good news are that towards the end of the quarter, uh, we saw encouraging stabilization in new sign up and top of funnel. So overall I would say going forward, the pipeline remain healthy. A lot of this is based on op Market, but also the bottom up. Mid-market part also looks healthy going forward. Uh, so we saw saw a growth in larger and higher quality opportunities, both touch and no touch and overall I say we we remain confident that all the action that we've done. In terms of top of the funnel, how we rebalance our acquisition channels. And all the investment we we've made in the last quarter, we paid off uh, going forward.

The traffic buildup that you're seeing from llms, I think you refer to that as AIO. Uh, and um, some of the other channels would be able to make up for what you're losing on the Google uh, the Google search side is it is it conceivable to get back to, uh, a net neutral position coming out of Q4 or maybe sometime in the first half of 26?

Yeah, hi, it's Roi. So uh, what we see is that we are able to uh, shift the budgets uh of our marketing towards like uh uh more sales lead, uh, sources and rebalance them, and get an Roi and like a little mentioned. These

Uh, channels take a bit longer to mature, and that's what we see. Now, we also are getting a lot of traffic from an increasing amount of traffic from AIO. It's too soon to tell if it'll fill that gap, but we are already feeling it with a different strategy.

Thank you.

Your next question comes from the line of Scott Berg with nem. Please go ahead.

Hi everyone. Thanks for taking my uh, questions here. Um, I think it was Iran earlier. I talked about some early, um, traction with some of the AI functionality that your customers are using just wanted to see if you had some, you maybe any specific use cases or maybe internal, you know, corporate departments that. You, you are willing to call out that that you're seeing that maybe the most early traction from some of the AI use cases. Thanks.

Yeah, Casey George here. It's actually been pretty fascinating. We launched a lot of these offerings that elevate and I had the opportunity to spend some time with with some, uh, pretty significant customers at Elevate and the resounding feedback was this is a very powerful tool and can solve a lot of problems in our organization. But specifically we had a large, uh, highly regulated insurance company in Europe. Um, who needed to solve a reporting issue, right? And typically, they had to acquire some software to go do that roughly 150,000 that they really didn't want to spend. They didn't get a ton of value out of this out of the software.

And so they went home that night or to their hotel, and in 20 minutes, they built a better tool that they could use, which would effectively get far more value out of, and obviously they didn't have to spend the $150,000. There was another large retailer I spent time with who pretty much did the same thing. They had a reporting gap in their organization, and they've been trying to solve it for an entire year. Uh, they...

There on the spot, uh, with some help from our team developed a reporting tool uh, in in a matter of uh, you know, less than 30 minutes and effectively solve the problem. As I said, that they've been trying to solve for a year, so it's a super powerful tool. And as as Roy mentioned, it's on a platform or an Enterprise platform that's already integrated in their organization. So their ability to deploy that and get value from it instantaneously is super powerful for them. So we continue to see, use cases like that, pop up all over the place. So obviously, we're pretty encouraged with early signs.

uh, understood helpful and then um,

Maybe a modeling question for for eleron as you pivot to some of these other channels that you guys started last quarter from a, you know, sales and marketing go to market kind of perspective is how should we think about leverage of sales and marketing kind of in the near term. Do do those channels still require I guess some overinvestment here in the short term to, you know, effectively turn them on or you know, would we, you know, or do you expect to still see some leverage there? You know, give them that you're not spending and and maybe that Google channel is much. Thank you.

Hey coach, Ian here. Uh so as a reminder, we have a hybrid model which is a combination of plg. The performance marketing plan that we already mentioned. We are shifting to other channels as well as the headcount that the quota carrying around Partners sales channels and customer success. So, uh, overall we when we are thinking about going into uh,

Next question comes from the line of Steve Anders with City.

Please go ahead.

Okay, great. Thanks for, um, thanks for taking the questions, uh, this morning. Um,

I guess I just want to dig a little bit more into just the, the performance marketing channel specifically and just I guess would be great to kind of get a breakdown for kind of what you saw within, you know, the the paid Google channel. I guess, I guess, hopefully through October if um, if you have that and then I guess, you know, secondarily just how the um how how the kind of the ramp and the other channels is is working and um you know how that's kind of uh I guess trending versus your uh your expectations there.

Yeah. Uh, hi, Stephen. This is Ron again. So look, as as I mentioned, we talked briefly about the zoom and the investor today. Um, you know, our Google AdWords Channel accounts for less than 10%, uh, of all the new Revenue. Uh, and overall, like I mentioned, we saw some choppiness, uh, Q3 but towards the end of the quarter, we saw civilization and that, and that's across, uh, Google AdWords and across all other channels. Uh, we see very healthy couple of funnel. Um, activity, also, the pipeline looks very healthy, it's growing, uh, according to our plans. So, so, look, I think overall, uh, we feel confident in going forward with our, with our acquisition strategy. And also,

So, you know, we also mentioned during the investigate the, the quality of the quantity. We continue to see a trend of this high quality customers, bigger lands more expansion, High retention. So overall, uh, we feel confident about the strategy and confidence about our ability to continue and acquire, uh, new type of funnel activity.

Okay. All right, great. That's, uh, that makes sense. Um,

And then I guess on on the the guidance, um, again, you know, just I understand Q4 is coming down a little bit, I guess on the back of that I I guess what. Maybe gives the the confidence as we as we think through um, you know, 26 and 27 that um, you know, you still feel good about that. 1 Point 1.8 billion dollar number, especially as we think about lapping, some of the price increases going into next year. Um, just yeah. How should we think through the those factors and what gives you all the the confidence behind those numbers?

Hey, hi everyone. It's a great question. So, you know, when we think about few, few few reasons why we are confident in next year, numbers first, the demands and expansion from our larger customers. So we're accelerating year-over-year growth for all up Market customers. So you have seen 50k 100K and 500k. I mentioned earlier, uh, we're accelerating year-over-year growth of rpos. Um, and we are improving the 50k ndr in addition to that, we have the multi-product adoption. That continues to Trend positively.

PRM is becoming very significant with more than 100 million dollar in and we are seeing customers, increasingly adopting multiple Solutions. We are only in the early Innings of, you know, customers that are adopting, uh, more than 1 product. And only, I think it was 6% that we said an investor day and now we're doing much much better. Uh, AI product engagement is accelerating. Uh, we were focused on educating, uh, and we focused on adoption of customers in the market and we see a very healthy adoption of AI products, uh, that we believe are going to monetize next year in a more significant way. And as I mentioned, we have signs of stabilization in top of funnel. At the end of the quarter that we are encouraged by that uh going into the fourth quarter and into next year.

Okay, perfect. Thanks again questions.

Your next question comes from the line of Alex zukin with Wolfe research.

Please go ahead.

Hey guys. Um, maybe just a uh, since we're bundling kind of the all the uh, new products into into 1 category. Uh, now maybe what's the latest on Monday CRM service products in terms of uh, Traction in the quarter? Uh how much they're contributing to net new are today and then I've got a quick uh follow-up question on the model.

Obviously, nine months in, we don't have a year-to-year comparison, but we're very bullish on both of those products going into next year.

Got it. Um, and then maybe, uh,

Eleron is just for you. If you've had a couple of questions regarding um, how you feel maybe about next year, specifically. I think it's just given some of the changing dynamics that you're mentioning around channels uh and and how you're going to Market and shifting spend. Uh, what's seemingly is a little bit of a change, uh, in terms of your guidance for Q4 versus previous years and periods in terms of passing through the beat and this timing adjustment, maybe just help us Pace, how we should think about the growth. Are you comfortable with where consensus, uh, is for next year? Is it something where it may be a little bit more? Uh, back-end loaded and you could actually see acceleration in 27, uh, because of some of these timing adjustments that that, that you're calling out, I think it would be really helpful for us to just understand the pacing of growth uh given some of these evolving Dynamics.

Hi Alex here. So I think I mentioned it earlier about uh you know if you think about where we're going to be in fiscal year 27, we said that we are going to achieve 1.8 billion in Revenue. We feel very confident with that. We feel very confident with the number based on everything that we see today. Um and you know this is something that we when we made the assumptions, we took into account the trends that we see today. We made some assumptions about the cross sell motion. Uh, the new products that we are launching to the market, um the fact that AI is going to be monetized to a certain extent, uh and the fact that we're going to expand within existing customer base. So having all of this into taking all of this into account, we feel that the 1.8 billion in fiscal is 27 is achievable in in the interim.

We are confident with the content of number for next year as well.

Perfect. Thank you guys.

Your next question comes from the line of DJ Hines with Kord.

Please go ahead.

Hey, good morning guys. Um, eleron is the new AI pricing model and the introduction of agent Factory feel like it gives you more or less visibility into the model. I'm just trying to think about

How these changes may impact? The ability to forecast? The business is, is AI. Becomes a more, you know, meaningful driver going forward.

Hey, it's Elon. So um, you know, with regards to visibility its early days. Uh, as I said earlier, we are focused on education and adoption uh within our customer base. It gives us confidence that we see that there is a strong momentum. However it's not something that is going to be very meaningful in the time in terms of Revenue uh next year uh so we take it into account but it's not very meaningful.

Okay. Uh and maybe I can go back to to Jackson's question. I mean, obviously we saw the acceleration in the RPO metrics that you're sharing. Are you seeing changes in contractor duration? As you go further up Market? Is that, is that a Tailwind to that RPO metric.

Uh, yeah, this is case for sure. Obviously, As you move up Market, uh, we would like longer term contracts and obviously our customers would as, as well. So, we are seeing an acceleration on the term length for our our contracts as we move up Market.

Yeah. Maybe to Casey. Yeah.

You have to add to, uh, Casey kind of, uh, what we see is basically that, uh, the percentage of our in terms of contract duration, uh, for multi is becoming more meaningful. In terms of the numbers coming from, uh, you know, 5%, uh, 5 years ago to now around 13%, we see the annual contracts are going uh from 65% to 70%.

Uh, so all together when you combine the annual plus the multi-product, you're getting more than 80% of our coming from annual plus multi-product. And this is something that the trend continues

Okay, got it. Thank you.

your next question comes from the line of Remo lenso with Berkeley's

Please go ahead.

Perfect. Thank you. Um, can I stay on RPO? Like, if I look at the old texts and the new numbers, it looks like you restated it and the numbers came down a little bit. Can you just explain what was going on there?

This Matrix as I said earlier to check some question provide the clear and reliable view in terms of our contracted Revenue based in future growth visibility going into next year.

Okay, perfect. Okay, so then we should be clean on RPO or it's just a change on accounting, basically.

Yes. Correct.

Okay, perfect. Okay, that's all I have. Thank you.

Your next question comes from the line of Derek wood with TD Cowen.

Please go ahead.

Great thanks. Um, so you mentioned that up Market motions, carry longer sales Cycles. Um, but you you you did see really strong growth and up Market kpis, new customers accelerating RPO accelerating. Uh, so are you seeing up Market pipelines? Tracking even higher than your Revenue growth? And if not for longer sales Cycles, you could, you know, be even stronger and I guess given Q4 tends to be when larger deals have seasonal, flush Dynamics. How do you think Q4 are setting up and anything to share with how how the quarter is tracking today?

We do continue to see an acceleration in our pipeline as we move up up Market, uh, as it relates to the quarter. All I would say is that, you know, when you move up Market, obviously you create somewhat of a hockey stick in the quarter. And then the year um, as we progress up Market, we continue to to see that phenomenon play out.

Uh but we're very encouraged with the pipeline that we built up market. And again we haven't uh really even started with the cross sell motion. Uh so we're we're uh we're bullish that that will only add additional pipeline to to the year.

Got it. Thanks. And on the AI side, I mean, when you look at Magic Vibe, Sidekick, Agent Builder, um, what would you call out as getting the most traction? Or how would you rank this group in terms of potential adoption over the next year or two?

So Vive is definitely, uh, taken off. That is, uh, that there's been a resounding excitement around that that offering, uh, obviously, we just announced it, but I had the opportunity, as I mentioned, since it's having customers that elevate, there was a ton of excitement around that, as I mentioned, a couple use cases, there's a dozen more that I could speak to where customers are literally using it that day and getting value from it. So we're obviously, uh, as I mentioned, very early on, but we're super excited about the prospects of of, uh, Vibe, uh, most particularly, because we're in the, the market to absorb that. So we're the, you know, Work Management Company. We're in a perfect spot for customers to, you know, change how they work and actually do work for them instead of just managing it. And these these offerings do absolutely that, whether it's our agents or vibes.

So again, pretty excited where we are, uh, looking forward to, to next year and seeing how that develops as we go, maybe, uh, just to add to what Casey mentioned. This is Iran. So I 100% agree, right? Right. Right now, presents the best opportunity for a monetization. And we see the most momentum with I would say. In addition to that, uh, we feel that Monday agents, uh, can also unlock new go to markets any type of customer that we didn't have before. Uh, so we we quickly excited about this 1, both for our existing customer base, but also our ability to tap into new type of of customer audiences.

Great. Thank you.

As a reminder, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad.

Your next question comes from the line of Rob Oliver with beard.

Please go ahead.

Great, thank you. Good morning. Uh, my

Questions for Casey. So,

On your side, uh, on the comment relative to sales Cycles. I just the first part of my question is on the longer sales Cycles. Obviously those are going to lengthen As you move up Market, but it does sound like a comment. It's a bit of a change from when you were on stage, um, a few months ago. So just wanted to understand, um, you know, putting aside the obvious change in sales Cycles, As you move up Market, which is clearly having success kind of what what, what changed in the market and then I had a quick follow-up.

With what I mentioned as Investor Day.

Got it helpful and then you know as you think about that move up Market obviously you guys have a very powerful partner Network um in the low to mid-range and and you know I know you're you're thinking a lot about Partners moving up Market as well and you know is there a way for us to think about how partner contribution may play a role um and uh perhaps you know as a percentage of new business or how you're thinking about those partner relationships and also ownership of those accounts in terms of internal versus a partner basis? Thanks.

Yeah, the ecosystem is always been very strategic to us and we'll continue to be. We we continue to grow our partner ecosystem. Almost daily. Um, especially as it relates to, some of our new offerings. We have new partners coming on board, that want to, uh, take advantage of our CRM, offering our service offerings. And obviously, now our AI offering. So it's not just about the existing ecosystem. We have today, it's about recruiting the right Partners to give us depth and breadth across the different regions, obviously, depending on the region. They play a more significant role, especially as we look at some of the emerging markets and apj and latam, they play a very significant role and we are really growing in those regions on the back of that partner ecosystem. So I'm I'm super excited about where we are with the ecosystem. Uh, even more excited about where it's going.

Helpful, great. Thank you.

Your next question comes from the line of Tom Blakey with Cantor.

Please go ahead.

Hey, uh, thanks for taking my questions here, just 2 for me on the uh, the sales cycles and the move up Market. I'm thinking of I think that's necessarily knew, you know, you've been very articulate in terms of uh, uh, laying that out even uh, before uh, analyst day just wondering if anything, you know, maybe kind of like, uh, downtick in terms of expectations there. Uh, and the most recent, couple months, uh, things are just maybe taking a little longer, the deals are getting more complicated as they become more penetrated, a victim of success. So to speak and then, secondly, um, double clicking on the uh, SMB. You know, if you're doing so well in these metrics that you're talking about with regard to nrr and RPO at the high end, um, and the Dell that's kind of implied into, uh, this 1.8 billion estimate for count of 27 has anything changed in terms of? I know you've been asked a couple times on the call but gross churn and the SMB side near term, and what are your expectations? You did a good job articulating. What the calendar 2017?

An estimate of uh, you know, kind of a bridge there, what are you expecting in terms of SMB uh with regard to that 1.8 billion, so near-term and long-term on SMB? Yes, thank you so much. So this is, this is case. I'll I'll answer the first part and I'll hand it to to eleron. So um, if you understand, when we talk about moving up Market, it doesn't necessarily mean we're talking about the Fortune 100, right? We're moving up through mid-market and quite honestly the the larger accounts are coming to us. So as it relates to some of the sales cycle, this it's just the natural sales Cycles. We see as we move up Market. That that has not changed. That's consistent. We plan for that and that's played out. Um, you know, very in a very healthy way in the numbers, right? And the SMB side that that has been a very consistent business for us. It continues to be, we, you know, we see acceleration, especially with the opportunity to sell the full platform because we can sell, uh, you know, the full platform into those, uh, that that customer set a clue.

Including our AI offering, so really, no change. I wouldn't highlight any concern whatsoever. It's playing out exactly as I expected; in some instances, it's actually playing out better. Um, but I'll hand it to Delaronde for some of the guidance on the SNB. Yeah. Um, Tom, can you run to your question on gross retention? So gross retention is now historically high, and we see this improvement going from fiscal year 2023. This is a result of the fact that we are going off market.

But also, as part of the price increase that we have done and the quality of the customers that are joining, the platform has been uh, better with regards to a question about sales. Like I just want to give kind of a more of a macro overview. I think that, you know, over the past few quarters not only from Monday, but in general, there is always some choppiness in the market with some uncertainties and therefore customers, uh, with regards to all all businesses are making, probably decisions, it takes them longer uh, with everything that is going on. Uh, and I would say it's more from Marco and Marco team and but we are seeing a positive momentum as as part of our uh, you know, experience with Casey.

Thank you. Thank you very helpful.

Your next question comes from the line of Matt Bullock with Bank of America.

Please go ahead.

About sales Salesforce productivity, you're adding, you know, quite a few quota carrying reps on the on the managed sales side, um, is is sales productivity tracking in line with expectations, maybe remind us how long uh, it takes a typical, you know, Enterprise or up market sales rep to ramp and then should we start to see more of those benefits in 26? As we we get more maturity in that Salesforce.

Yeah. We're seeing uh, productivity move in the right direction, a very healthy direction. I would tell you, this is the part of most excited about, right? If you think about all the offerings, we have available to the market, we we're going to be our best reference. And when I say that we're using the technology that we're taking the market to effectively, make our sellers more productive. So we have our AI agents. Um, we have our customer success agent uh customer success AI agents. We have an A a number of internal processes that where we're leveraging AI. So it's not just about us going to Market with these offerings. Uh it's about making our sellers more productive and AI is playing a huge role in that. So our break our productivity continues to improve, I do expect uh an even greater Improvement next year because of some of the the uh changes we're making with uh with our AI agents.

Fantastic. And then 1, quick follow-up. If I could, um, it sounds like maybe the the embedded contribution for 2026 from AI products is, is expected to be a little bit more measured. But maybe if you could, you know, help us think about what's embedded in terms of the assumptions for the 2027 1.8 billion, you know, Revenue Target, is there anything you can give us in terms of the embedded AI product contribution or, you know, if not, maybe just the the core versus the the multi-product, that'd be helpful. Thank you.

Hi, it's Alan. So as I mentioned earlier, they are not going to be any new product other than the air products that we introduced to the market. Uh, as a reminder, we have more than 250,000 customers and very few of them are using a very low percentage of them are using more than 1 product. So the cross cross sell motion is going to be very strong between, for example, service and Work Management. CRM will continue to be, uh, strong with the Monday campaign that we introduced the just recently, uh, we are expecting some Revenue, uh, from AI product, but as you said, it's going to be more moderate but the impact of that can be on the retention of our existing customer base. You, it's not directly Revenue, but the the fact that our growth retention is better. The fact that we have more thickness on the platform is generating, more Revenue opportunities that are going to impact other products as well. Um, so taking all of this into account, uh, you know, provide us with the confidence on going into 1.8 billion in 6327.

Thank you.

Your last question comes from the line of Taylor McGinness with UBS.

Please go ahead.

Yeah. Hi thanks so much. Sam for taking my questions. Maybe just the first 1. I know you guys have gotten, you know, this question in a number of ways, but just be, you know, a little bit clearer. So if it's my understanding, it sounds like the success that you guys are seeing up Market. Maybe isn't, you know, just yet to offset some of the choppiness or stop this down market and so maybe that, you know, is what led to the 4q guidance Cuts. So can you just, you know, talk through and give a little bit more clarity on? Like what got tougher is it that you thought, you know, up Market would have been growing faster to offset this lower growth down Market or did something within, you know, SMB and down Market get softer than before

Yeah, hi Taylor. This is Iran. So, I don't think it's a matter of, of of, uh, some of that has got harder, uh, in terms of acquisition is just a shift, in, in the type of customer that we acquired, uh, during this quarter. So, um, you know, we, as we've said, we've pivoted some of the budget, uh, to different channels. Uh, we saw those, uh, bringing great pipeline, just this popular in takes a little bit longer to convert. So it it's not that 1 of the expense of the other, just different type of customer. But overall this serves our strategy, uh, going up Market higher quality of customers. Uh, and if anything just accelerate uh, the motion that we already started.

Perfect. Thanks. And then, just my last one is, um, Eliran, you talked earlier about, uh, comfort in the street numbers for next year. So just curious, like, in order to hit those numbers, do we need to start to see stabilization in the core Work Management, you know, business, maybe adjusted for some of the bigger changes in price? And then, if so, could you just speak to, um, when it sounds like, you know, there's still choppiness and some trends out there. Is that something that's embedded in the outlook for next year? Maybe you could just speak to, you know, your, um, your comfort in the assumptions and how we think, you know, about that number going forward. Thanks.

Regards to numbers for next year. As I said, we are going to uh, present them in our next earnings release on February. We're going to provide you a full visibility and transparency with regards to the assumptions that we are taking into account. Um I did say that we have some confidence in next year numbers as a fact of everything, that all the trends that we are seeing. Now the momentum that we are seeing uh, up Market as well as the fact that we are starting to see stabilization in our down Market, uh, top of funnel activity. Uh, these are the things that makes us feel comfortable, uh, about the content of furniture and hi Troy, I can add that like, Work Management is our leading product. And uh, we see that we are succeeding with our app market strategy, mainly through Work Management. So it's like, uh,

We're leading that market, and we see great potential going forward and growing with it as well.

Thank you so much.

Yeah, no further questions at this time, ladies and gentlemen. This concludes today's call. Thank you all for joining, and you may now disconnect.