Q1 2026 monday.com Ltd Earnings Call

May 11, 2026

Operator 2: Good day. My name is Desiree, and I'll be your conference operator today. At this time, I would like to welcome everyone to monday.com's Q1 fiscal year 2026 Earnings Conference Call. I would like to turn the call over to monday.com's Vice President of Investor Relations, Mr. Byron Stephen. Please go ahead.

Operator: Good day. My name is Desiree, and I'll be your conference operator today. At this time, I would like to welcome everyone to monday.com's Q1 fiscal year 2026 Earnings Conference Call. I would like to turn the call over to monday.com's Vice President of Investor Relations, Mr. Byron Stephen. Please go ahead.

Speaker #1: I would like to turn the call over to monday.com's Vice President of Investor Relations, Mr. Byron Stephen. Please go ahead.

Speaker #2: Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for monday.com's first quarter, fiscal year 2026. Joining me today are Roy Mann and Eran Zinman, Co-CEOs of monday.com.

Byron Stephen: Hello, everyone, and thank you for joining us on today's conference call to discuss the financial results for monday.com's first quarter fiscal year 2026. Joining me today are Roy Mann and Eran Zinman, co-CEOs of monday.com; Eliran Glazer, monday.com's CFO; and Casey George, monday.com's CRO. We released our results for the first quarter fiscal year 2026 earlier today. You can find our quarterly shareholder letter along with the 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.

Speaker #2: Eliran Glazer, monday.com CFO, and Casey George, monday.com CRO. We released our results for the first quarter of fiscal year 2026 earlier today. You can find our quarterly shareholder letter, along with the investor presentation and a replay of today's webcast.

Byron Stephen: You can find our quarterly shareholder letter along with the 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.

Speaker #2: 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.

Speaker #2: These statements involve risk and uncertainties that may cause actual results to differ from our expectations. Please refer to our earnings release for more information.

Byron Stephen: Please refer to our earnings release for more information on the specific factors that could cause actual results to differ materially from our forward-looking statements. Additionally, non-GAAP financial measures will be discussed on the call. Reconciliations to the 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.

Speaker #2: On the specific factors that could cause actual results to differ materially from a forward-looking statement. Additionally, non-gap financial measures will be discussed on the call.

Speaker #2: Reconciliations to the 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.

Speaker #2: Now, let me turn the call over to Roy.

Speaker #3: Thank you, Byron, and thank you, everyone, for joining us today. monday.com delivered a strong start to 2026. Q1 revenue grew 24% year over year, reflecting sustained demand for our platform as enterprises consolidate their work infrastructures.

Roy Mann: Thank you, Byron, and thank you everyone for joining us today. monday.com delivered a strong start to 2026. Q1 revenue grew 24% year over year, reflecting sustained demand for our platform as enterprises consolidate their work infrastructures. We generated a record $49 million in operating profit, demonstrating that our growth is increasingly efficient. Adjusted free cash flow margin expanded to 29%, underscoring the financial durability of our business model. Gross retention continued to improve in Q1, reaching historical highs for the company, reflecting how deeply monday.com is embedded in how our customers run their businesses. Enterprise momentum continued to build with 42% of ARR coming from our customers with over $50,000 in ARR.

Speaker #3: We generated a record $49 million in operating profit, demonstrating that our growth is increasingly efficient. Adjusted free cash flow margin expanded to 29%, underscoring the financial durability of our business model.

Speaker #3: Gross retention continued to improve in Q1, reaching historical highs for the company, reflecting how deeply monday.com is embedded in how our customers run their businesses.

Roy Mann: Gross retention continued to improve in Q1, reaching historical highs for the company, reflecting how deeply monday.com is embedded in how our customers run their businesses. Enterprise momentum continued to build with 42% of ARR coming from our customers with over $50,000 in ARR.

Speaker #3: Enterprise momentum continued to build, with 42% of ARR coming from our customers with over $50,000 in ARR. A record number of new customers with over $500,000 in ARR, and average contract values continued to expand.

Roy Mann: A record number of new customers with over $500K in ARR and average contract values continued to expand, reinforcing that the consolidation of work infrastructure onto monday.com is a durable enterprise-led trend. The market is also responding to our AI product. Approximately 10% of our net new ARR in Q1 was driven by AI, a figure we expect to grow as our AI offering expand and mature. We are also seeing the benefits of AI play out in signed monday.com itself. Since 2025, AI has driven a 32% increase in our output per developer and a 38% reduction in product time to market. AI gives our engineers the bandwidth to be more rigorous about the architecture, edge cases, and long-term maintainability. The result is a team that ships more and breaks less.

Speaker #3: Reinforcing that the consolidation of work infrastructure onto monday.com is a durable enterprise-led trend. The market is also responding to our AI product, approximately 10% of our net new ARR in Q1 was driven by AI.

Speaker #3: A figure we expect to grow as our AI offering expands and matures. We are also seeing the benefits of AI play out in signed monday.com itself.

Speaker #3: Since 2025, AI has driven a 32% increase in our output per developer.

Roy Mann: Since 2025, AI has driven a 32% increase in our output per developer and a 38% reduction in product time to market. AI gives our engineers the bandwidth to be more rigorous about the architecture, edge cases, and long-term maintainability. The result is a team that ships more and breaks less.

Speaker #2: And a 38% reduction in product time to market.

Speaker #3: AI gives our engineers the bandwidth to be more rigorous about the architecture, edge cases, and long-term maintainability. The result is a team that ships more and breaks less.

Speaker #3: We believe this is an early but meaningful signal of what AI-native engineering looks like in practice, and we intend to keep pushing on that frontier.

Roy Mann: We believe this is an early but meaningful signal of what AI native engineering looks like in practice, and we intend to keep pushing on that frontier. Now let me turn it over to Eran to walk you through some of the significant progress we've made in our AI-driven products during the quarter.

Speaker #3: Now, let me turn it over to Erran to walk you through some of the significant progress we've made in our AI-driven products during the quarter.

Speaker #2: Thank you, Roy. At our investor day last September, we laid out a fundamental shift in how we see monday.com—not as a platform that helps teams manage work, but one that actually does the work for them.

Eran Zinman: Thank you, Roy. At our Investor Day last September, we laid out a fundamental shift in how we see monday.com. Not a platform that helps teams manage work, but one that actually does the work for them. Last week, we took the most significant step in that journey, changing our core offering from monday work management to monday AI work platform. This is not a feature release or a rebrand. We have re-architectured the core of our platform around a single belief that work should be orchestrated between humans and AI agents at scale from a single system of records. AI agents that execute work, flexible software that adapts to how teams operate, and enterprise-grade governance, all grounded in mondayDB, our single source of truth that gives AI the context to drive real outcomes.

Speaker #2: Last week, we took the most significant step in that journey: changing our core offering from Monday Work Management to Monday AI Work Platform. This is not a feature release or a rebrand.

Eran Zinman: This is not a feature release or a rebrand. We have re-architectured the core of our platform around a single belief that work should be orchestrated between humans and AI agents at scale from a single system of records. AI agents that execute work, flexible software that adapts to how teams operate, and enterprise-grade governance, all grounded in mondayDB, our single source of truth that gives AI the context to drive real outcomes.

Speaker #2: We have re-architected the core of our platform. Around single belief that work should be orchestrated between humans and AI agents. At scale, from a single system of records.

Speaker #2: AI agents that execute work, flexible software that adapts to how teams operate, and enterprise-grade governance, all grounded in MondayDB. Our single source of truth that gives AI the context to drive real outcomes.

Speaker #2: This quarter, we took that foundation further with MondayDB 3.0. Delivering 100X increase in scale, from 100,000 items per board to over 10 million, with high performance, low latency execution, designed to accelerate AI adoption rather than constrain it.

Eran Zinman: This quarter, we took that foundation further with mondayDB 3.0, delivering a 100x increase in scale from 100,000 items per board to over 10 million, with high performance, low latency execution designed to accelerate AI adoption rather than constrain it. A standalone AI tool that can automate a task, monday can run an entire operation. With more than 250,000 customers already running their work inside monday, we have a data advantage that no point solution can replicate. Alongside the platform launch, we're making an equally important change to how customers pay for monday. We recently introduced a new seats plus credits pricing structure for new customers, moving to consumption-based pricing that aligns what customers pay with the value AI actually delivers. As AI agents takes on more work across organizations, revenue expands naturally without requiring additional seats purchases.

Speaker #2: A standalone AI tool that can automate a task. Monday can run an entire operation. And with more than 250,000 customers already running their work inside Monday, we have a data advantage that no point solution can replicate.

Speaker #2: Alongside the platform launch, we're making an equally important change. To how customers pay for Monday. We recently introduced a new seats plus credits pricing structure for new customers.

Eran Zinman: Alongside the platform launch, we're making an equally important change to how customers pay for monday. We recently introduced a new seats plus credits pricing structure for new customers, moving to consumption-based pricing that aligns what customers pay with the value AI actually delivers. As AI agents takes on more work across organizations, revenue expands naturally without requiring additional seats purchases.

Speaker #2: Moving to consumption-based pricing that aligns what customers pay with the value AI actually delivers. As AI agents take on more work across an organization, revenue expands naturally without requiring additional seat purchases.

Speaker #2: We plan to allow existing customers to opt in to this new model, with enterprise customers receiving complimentary AI packages to support adoption at scale.

Eran Zinman: We plan to allow existing customers to opt in to this new model, with enterprise customers receiving complimentary AI packages to support adoption at scale. In addition to that, we are excited to announce our agreement to acquire OneAI. Their team has spent years solving one of the hardest problems in enterprise AI, making voice agents that actually work in production environments. With this acquisition, we are bringing native voice capabilities directly into the AI work platform, extending the ways agents can engage with customers and teams. We're not managing monday.com as a company defending its position. We are rebuilding it as the company that defines what an an AI work platform means for businesses. Q1 was a strong step in that direction. We remain focused on execution, we look forward to demonstrating continued progress throughout 2026.

Speaker #2: In addition to that, we are excited to announce our agreement to acquire OneAI. Their team is spending years solving one of the hardest problems in enterprise AI: making voice agents that actually work in production environments.

Speaker #2: With this acquisition, we are bringing native voice capabilities directly into the AI Work Platform, extending the ways agents can engage with customers and teams.

Eran Zinman: With this acquisition, we are bringing native voice capabilities directly into the AI work platform, extending the ways agents can engage with customers and teams. We're not managing monday.com as a company defending its position. We are rebuilding it as the company that defines what an an AI work platform means for businesses. Q1 was a strong step in that direction. We remain focused on execution, we look forward to demonstrating continued progress throughout 2026.

Speaker #2: We are not managing monday.com as a company defending its position. We are rebuilding it—as the company that defines what an AI Work Platform means for businesses.

Speaker #2: Q1 was a strong step in that direction. We remain focused on execution, and we look forward to demonstrating continued progress throughout 2026. With that, I'll turn it over to Eliran to cover our financials and guidance.

Eran Zinman: With that, I'll turn it over to Eliran to cover our financial and guidance.

Speaker #3: Thank you, Eran, and thank you to everyone for joining our call. Today, I'll review our first quarter fiscal year 2026 results in detail and provide updated fiscal year 2026 guidance. As Roy mentioned, we have had a strong start to 2026.

Eliran Glazer: Thank you, Eran, and thank you to everyone for joining our call. Today, I'll review our Q1 fiscal year 2026 results in detail and provide updated fiscal year 2026 guidance. As Roy mentioned, we have had a strong start to 2026. Total revenue in Q1 came in at $351 million, up 24% from the year ago quarter. Our overall NDR was 110% in Q1. We now expect overall NDR to slightly decline by the end of fiscal year 2026. As a reminder, our NDR is a trailing four-quarter 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 a reconciliation of GAAP to non-GAAP financials in our earnings release.

Speaker #3: Total revenue in Q1 came in at $351 million, up 24% from the year-ago quarter. Our overall NDR was 110% in Q1. We now expect overall NDR to slightly decline by the end of fiscal year 2026. As a reminder, our NDR is a trailing four-quarter weighted average calculation.

Eliran Glazer: Our overall NDR was 110% in Q1. We now expect overall NDR to slightly decline by the end of fiscal year 2026. As a reminder, our NDR is a trailing four-quarter 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 a reconciliation of GAAP to non-GAAP financials in our earnings release.

Speaker #3: For the reminder of the financial metrics disclosed, unless otherwise noted, I will be referencing a non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financial in our earnings release.

Speaker #3: First quarter gross margin was 89% compared to 90% in the year-go quarter. Research and development expense was 78.4 million in Q1 or 22% of revenue up from 19% in the year-go quarter.

Eliran Glazer: First quarter gross margin was 89% compared to 90% in the year ago quarter. Research and development expense was $78.4 million in Q1, or 22% of revenue, up from 19% in the year ago quarter. Sales and marketing expense was $158.2 million in Q1, or 45% in revenue, compared to 48% in the year ago quarter. General and administrative expense was $28.6 million in Q1, or 8% of revenue, compared to 9% in the year ago quarter. Operating income was $49 million in Q1, up from $40.8 million from the year ago quarter, and operating margin was 14%, similar to the year ago quarter.

Speaker #3: Sales and marketing expense was $158.2 million in Q1, or 45% of revenue, compared to 48% in the year-ago quarter. General and administrative expense was $28.6 million in Q1, or 8% of revenue, compared to 9% in the year-ago quarter.

Speaker #3: Operating income was $49 million in Q1, up from $40.8 million in the year-ago quarter, and operating margin was 14%, similar to the year-ago quarter.

Speaker #3: Operating margin in Q1 had an approximately 190 basis points negative FX impact, mainly from the appreciation of the Israeli shekel compared to the US dollar.

Eliran Glazer: Operating margin in Q1 had an approximately 190 basis points negative FX impact, mainly from the appreciation of the Israeli shekel compared to the US dollar. Net income was $56 million in Q1, compared to $58.4 million from the year ago quarter. Diluted net income per share was $1.15 in Q1, based on 48.9 million fully diluted shares outstanding. Total employee headcount was 3,211, an increase of 56 employees since Q4 2025. For the remainder of fiscal year 2026, we expect headcount to stay largely flat, reflecting the productivity gains AI is already delivering across our organization. Moving on to the balance sheet and cash flow.

Speaker #3: Net income was $56 million in Q1, compared to $58.4 million in the year-ago quarter. Diluted net income per share was $1.15 in Q1, based on 48.9 million fully diluted shares outstanding.

Speaker #3: Total employee headcount was 3,211, an increase of 56 employees since Q4 2025. For the remainder of fiscal year 2026, we expect headcount to stay largely flat, reflecting the productivity gains AI is already delivering across our organization.

Speaker #3: Moving on to the balance sheet and cash flow, we ended the quarter with $1.21 billion in cash, cash equivalents, and marketable securities, compared to $1.67 billion at the end of Q4 2025, reflecting $553 million of shares repurchased executed during the quarter.

Eliran Glazer: We ended the quarter with $1.21 billion in cash equivalents, and marketable securities, compared to $1.67 billion at the end of Q4 2025, reflecting $553 million of shares repurchase executed during the quarter. As of the end of Q1, approximately $182 million remained available under our existing share repurchase authorization program. Adjusted free cash flow for Q1 was $102.8 million, and adjusted free cash flow margin was 29%. We now estimate that the accelerated share buyback executed during Q1 will reduce full year 2026 adjusted free cash flow by approximately $20 million. Adjusted free cash flow is defined as net cash from operating activities less cash used for property and equipment and capitalized software cost, plus cost associated with the build-out and expansion of our corporate headquarters.

Speaker #3: As of the end of Q1, approximately $182 million remained available under our existing share repurchase authorization program. Adjusted free cash flow for Q1 was $102.8 million, and adjusted free cash flow margin was 29%.

Eliran Glazer: Adjusted free cash flow for Q1 was $102.8 million, and adjusted free cash flow margin was 29%. We now estimate that the accelerated share buyback executed during Q1 will reduce full year 2026 adjusted free cash flow by approximately $20 million. Adjusted free cash flow is defined as net cash from operating activities less cash used for property and equipment and capitalized software cost, plus cost associated with the build-out and expansion of our corporate headquarters.

Speaker #3: We now estimate that the accelerated share buyback executed during Q1 will reduce full year 2026 adjusted free cash flow by approximately 20 million. Adjusted free cash flow is defined as net cash from operating activities less cash used for property and equipment and capitalized software cost.

Speaker #3: Plus cost associated with the build-out and expansion of our corporate headquarters. Let's now turn to our updated outlook for fiscal year 2026. For the second quarter of fiscal year 2026, we expect our revenue to be in the range of 354 million to 356 million, representing growth rate of 18% to 19% year over year.

Eliran Glazer: Let's now turn to our updated outlook for fiscal year 2026. For the Q2 of fiscal year 2026, we expect our revenue to be in the range of $354 to 356 million, representing growth rate of 18% to 19% year over year. We expect non-GAAP operating income of $46 to 48 million, with an operating margin of 13% to 14%, which assumes a negative FX impact of 100 to 200 basis points. For the full year 2026, we expect revenue to be in the range of $1.466 to 1.474 billion, representing growth of 19% to 20% year over year.

Speaker #3: We expect non-GAAP operating income of $46 million to $48 million, with an operating margin of 13% to 14%, which assumes a negative FX impact of 100 to 200 basis points.

Speaker #3: For the full year 2026, we expect revenue to be in the range of 1.466 billion to 1.474 billion, representing growth of 19% to 20% year over year.

Speaker #3: We expect full-year non-GAAP operating income of $185 million to $191 million, with an operating margin of approximately 13%, which assumes a negative FX impact of 100 to 200 basis points.

Eliran Glazer: We expect full year non-GAAP operating income of $185 to 191 million, with an operating margin of approximately 13%, which assume a negative FX impact of 100 to 200 basis points. We expect full year adjusted free cash flow of $280 to 290 million, with adjusted free cash flow margin of 19% to 20%, which assume a negative FX impact of 100 to 200 basis points. Let me now turn it over to the operator for your questions.

Speaker #3: We expect full year adjusted free cash flow of $280 million to $290 million, with adjusted free cash flow margin of 19% to 20%, which assumes a negative FX impact of 100 to 200 basis points.

Speaker #3: Let me now turn it over to the operator for your questions.

Speaker #2: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press *1 on your telephone keypad to raise your hand and join the queue.

Operator 2: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow-up question only. Thank you. Our first question comes from the line of Raimo Lenschow with Barclays. Your line is open.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Speaker #2: If you would like to withdraw your question, simply press *1 again. If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Operator: If you are called upon to ask your question and are listening via speakerphone in your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question and one follow-up question only. Thank you. Our first question comes from the line of Raimo Lenschow with Barclays. Your line is open.

Speaker #2: We do request for today's session that you please limit to one question and one follow-up question only. Thank you. And our first question comes from the line of Raimo Lentjo with Barclays.

Speaker #2: Your line is open.

Speaker #4: Hey, guys. This is Damon Cogganell from Raimo. Thanks for taking the question. Can you help us understand the new updated NDR guide? As I think about the Q1 results and the full year guide, it seems like stabilization throughout the business, and then I look at the NDR guide, and print across your cohorts, it just seems like there's more stability in the results than maybe the guide.

Damon Cogginall: Hey, guys. This is Damon Cogginall from Barclays. Thanks for taking the question. Can you help us understand the new updated NDR guide? As I think about the Q1 results and the full year guide, it seems like stabilization throughout the business, and then I look at the NDR guide and print across your cohorts, it just seems like there's more stability in results than maybe the guide. Yeah, any help there would be great.

Speaker #4: Yeah, any help there would be great.

Speaker #3: Hi, Ryan. This is Eliran. So, thank you for the question. There is a lot on the retention and expansion side that we are very positive on.

Eliran Glazer: Hi, Ryan, this is Eliran. Thank you for the question. There is a lot on retention and expansion side that we are very positive on. Gross retention is at historical high. We're still seeing double-digit feed growth year-over-year in our mid-market and enterprise customers. 34% of our 50K customer score has, you know, adopted more than one product. It was 29% in Q4. We're seeing a lot of positive signs. As a reminder, we're lapping the pricing actions from 2024, two years ago in 2025, and they increased our NDR by 1% or 2%. We're going to lap this at the end of Q2.

Speaker #3: Gross retention is a historical high. We are still seeing double-digit seed growth year over year. In our mid-market and enterprise customers, 34% of our 50K customers' cohort has adopted more than one product.

Speaker #3: It was 29% in Q4. So we're seeing a lot of positive signs. As a reminder, we're lapping the pricing actions from 2024 two years ago and 2025.

Speaker #3: And they increased our NDR by 102%. We're going to lap this at the end of Q2, or during Q—sorry, at the end of Q2.

Speaker #3: And we don't believe that expansion or new adoption will now be enough to offset some of the pricing growth that we have seen in the past.

Eliran Glazer: We don't believe that expansion or new adoption will now be enough to offset some of the pricing growth over that we have seen in the past.

Speaker #4: Got it. And I guess, can you just provide an update on the top-of-funnel demand that you're seeing now compared to the end of 2025?

Damon Cogginall: Got it. I guess, can you just provide an update on the top of funnel demand that you're seeing now compared to the end of 2025? I know the initial 2026 guide did imply some degradation to top of funnel. I guess just what is the updated full year guide now imply, maybe compared to Q1? Thank you.

Speaker #4: I know the initial 2026 guide did imply some degradation to the top of funnel. So I guess, what does the updated full-year guide now imply, maybe compared to Q1?

Speaker #4: Thank you.

Speaker #3: Yeah. So this is Raimon. So look, we have nothing new to report with PaySearch. Overall, the top-of-funnel environment remains soft, but it's pretty much in line with our expectations that we gave in the beginning of the year.

Eran Zinman: Yeah. So this is Eran. Look, we have nothing new to report with paid search. Overall, the top of funnel environment remains soft, but it's pretty much in line with our expectations that we gave in the beginning of the year. I would say that on top of that, ACV of new lands is increasing across touch and no touch. We're seeing high quality leads coming into the platform, and we continue to manage performance marketing cautiously. Pretty much in line with what we expected.

Speaker #3: I would say that on top of that, ACV of new lands is increasing across touch and no touch. So we've seen high-quality leads coming into the platform.

Speaker #3: And we continue to manage performance marketing cautiously. So pretty much in line with what we expected.

Speaker #2: Next question comes from the line of Josh Baer with Morgan Stanley. Your line is open.

Operator 2: Next question comes from the line of Josh Baer with Morgan Stanley. Your line is open.

Operator: Next question comes from the line of Josh Baer with Morgan Stanley. Your line is open.

Speaker #4: Great. Thanks for the question. Congrats on a good quarter. I wanted to talk a little bit more about the new seed plus credits pricing model.

Josh Baer: Great. Thanks for the question. Congrats on a good quarter. Wanted to talk a little bit more about the new seats plus credits pricing model. Maybe to start, like, can you just provide a little more context on how exactly that works? Then also wondering, what are the impacts in 2026 from the new model?

Speaker #4: Maybe to start, can you just provide a little more context on how exactly that works, and then also wondering what are the impacts in 2026 from the new model?

Speaker #3: Yeah. Hi, Josh. This is Raimon. So maybe I can start, and then hand it over to Casey. So look, we're very excited for this change.

Eran Zinman: Hi, Josh, this is Eran. Maybe I can start and then hand it over to Casey. Look, we're very excited for this change. It's the biggest change in the company history. We're changing the core offering of our product with the new native agents within the platform. Customers will be able to do the actual work in addition to managing work. Part of that change is that new customers will have two vectors of expansion. One with seats, meaning the more people they add, the more they pay for seats. The same way it used to be. There's an additional vector on top of that for AI credits. The more they consume AI credits, the more they pay, the more they're gonna use our agents and other functionality.

Speaker #3: It's the biggest change in the company history with changing the core offering of our product. With the new native agents within the platform, customers will be able to do the actual work in addition to managing work.

Speaker #3: Part of that change is that new customers will have two vectors of expansion. One with seeds, meaning the more people they add, the more they pay for seeds.

Eran Zinman: Part of that change is that new customers will have two vectors of expansion. One with seats, meaning the more people they add, the more they pay for seats. The same way it used to be. There's an additional vector on top of that for AI credits. The more they consume AI credits, the more they pay, the more they're gonna use our agents and other functionality.

Speaker #3: The same way it used to be. But there's an additional vector on top of that for AI credits. So the more they consume AI credits, the more they pay, the more they're going to use our agents and other functionality.

Speaker #3: For existing products, it's going to be gradual. I'll let Casey kind of cover the change we're going to do with existing ones.

Eliran Glazer: For existing products, it's gonna be gradual. I'll let Casey kind of cover the change we're gonna do with existing ones.

Speaker #5: Yeah. So we spent a lot of time—hi, Josh, by the way—we spent a lot of time getting feedback from our customers, and what we've rolled out is very consistent with how they want to consume value in our platform.

Casey George: Yeah. Hi, Josh, by the way. We've spent a lot of time getting feedback from our customers and what we've rolled out is very consistent with how they wanna consume value in our platform. As you heard from Eran with our new customers, it is, it comes with, you know, seats plusCredits for existing customers, it's gonna be an opt-in motion. We'll work with them over the next, you know, couple years as they look to move into this model. We are gonna incentivize those customers to move to the new model, especially with our touch customers, where we spend a lot of time with them building use cases and finding new ways for them to consume our platform leveraging AI.

Speaker #5: As you heard from Raimon with our new customers, it is a it comes with seeds plus credits. For existing customers, it's going to be an opt-in.

Speaker #5: Motion. So we'll work with them over the next couple of years as they look to move into this model. We are going to incentivize those customers to move to the new model, especially with our touch customers, where we spend a lot of time with them building use cases and finding new ways for them to consume our platform leveraging AI.

Speaker #4: Got it. Thank you. And so for as far as 2026, are there any assumptions on the impacts from the new model, either from the new customers who are on it or, I guess, also what are the assumptions as far as the adoption from existing customers?

Josh Baer: Got it. Thank you. For as far as 2026, are there any assumptions on the impacts from the new model, either from the new customers who are on it or, I guess also what are the assumptions as far as the adoption from existing customers? Just last on this subject.

Speaker #4: And then just last on this subject,

Speaker #3: Hi, it's Eliran. So, Josh, it's still early stage. We will have a much clearer picture in the coming months, and then we can provide updates or more color on what we're going to see.

Eliran Glazer: Hi, it's Eliran. Josh, it's still early stage. You know, we will have much clearer picture in the coming months, and then we can provide updates or more color on what we're going to see. For now, we didn't assume any significant impact or any impact on the numbers.

Speaker #3: For now, we didn't see any significant impact, or any impact, on the numbers.

Speaker #2: Either with Q1 capital markets. Your line is open.

Operator 2: Either with KeyBanc Capital Markets. Your line is open.

Operator: Either with KeyBanc Capital Markets. Your line is open.

Speaker #4: Great. Thanks for taking our questions, guys. I guess if I can just quickly follow up on the pricing model as well. Are you guys actually seeing either slowing in employee headcount or seed growth at existing customers, or are you just kind of making this change in anticipation just to decouple yourselves from being so dependent on seeds?

[Analyst] (KeyBanc Capital Markets): Great. Thanks for taking our questions, guys. I guess if I can just quickly follow up on that pricing model as well. Are you guys actually, you know, seeing either slowing in employee headcount or seat growth at existing customers? Are you just making this change in anticipation and just to decouple yourselves from being so dependent on seats? I'm curious whether it's forward-looking or you're actually seeing it today.

Speaker #4: I'm curious whether it's forward-looking or you're actually seeing it today.

Speaker #5: Yeah. Thank you for the question. We have not seen any degradation in demand relative to seeds. What we have seen is customers looking to use our platform, leveraging AI, and that's why we've launched this new platform.

Casey George: Yeah. Thank you for the question. We have not seen any degradation in demand relative to seats. What we have seen is customers looking to use our platform, leveraging AI, and that's why we've launched this new platform. Overall, the demand continues to be strong for new seats, and we actually see acceleration in some of the emerging markets where we've invested. Up-market is strong. Seat demand continues to be very solid, and they're taking on new workloads leveraging AI.

Speaker #5: So overall, the demand continues to be strong for new seeds. And we actually see acceleration in some of the emerging markets where we've invested.

Speaker #5: So up market is strong. Seed demand continues to be very solid. And they're taking on new workloads, leveraging AI.

Speaker #4: Great. Okay. Thanks, Casey. Actually, if we I'll stick with you. The larger lands, from the direct sales motion with larger trying to land a little bit more up market, curious how that's trended.

[Analyst] (KeyBanc Capital Markets): Great. Okay. Thanks, Casey. Actually, I'll stick with you, the larger lands, you know, from the, from the direct sales motion with larger, you know, trying to land a little bit more up-market. Curious how that's trended. I know the, you know, 50,000, 500,000 seats, but curious whether that's driven by new lands or people kinda graduating up into that segment of the customer base. Thank you.

Speaker #4: I know the 50,000, 500,000 seeds, but curious whether that's driven by new lands or people kind of graduating up into that segment of the customer base.

Speaker #4: Thank you.

Speaker #5: Yeah, yeah. And it's both. We saw double-digit growth for both mid-market and enterprise segments relative to seeds. Our ACV grew 22% year over year.

Casey George: Yeah. It's both. We saw double-digit growth for both mid-market and enterprise segments relative to seats. Our ACV grew 22% year to year. You know, gross retention's at historical highs. Obviously, with RPO, we see some seasonal declines, which we're anticipating. It's pretty much in line with what we've seen in prior Q1 performance. Pipeline's very strong. Matter of fact, our March was one of the strongest months we've ever had. As we move up market, as we've talked about before, we get exposed to the buying cycles of those larger customers. We see less linearity in the quarter, but really delivering the last month of every quarter seems to be consistent.

Speaker #5: Our gross retention is at historical highs, and obviously with RPO, we see some seasonal declines, which we're anticipating. It's pretty much in line with what we've seen in prior Q1 performance.

Speaker #5: Pipeline's very strong. As a matter of fact, our March was one of the strongest months we've ever had. So as we move up market, as we've talked about before, we get exposed to the buying cycles of those larger customers.

Speaker #5: So, we see less linearity in the quarter, but really delivering in the last month of every quarter—it seems to be consistent.

[Analyst] (KeyBanc Capital Markets): Great. Okay. Thank you.

Speaker #4: Great. Okay. Thank you.

Operator 2: Next question comes from the line of Mark Murphy with J.P. Morgan. Your line is open.

Operator: Next question comes from the line of Mark Murphy with J.P. Morgan. Your line is open.

Speaker #2: Next question comes from the line of Mark Murphy with JB Morgan. Your line is open.

Speaker #4: Oh, thank you so much. And I'll add my congrats on a very nice performance. So with the understanding you had a solid quarter and the gross revenue retention improved, can you share what you are observing within the customer base in the last several months as Claude could and Claude Cowork have proliferated globally pretty rapidly?

Mark Murphy: Thank you so much, and I'll add my congrats on a very nice performance. You know, with the understanding you had a solid quarter and the gross revenue retention improved, could you share what you are observing within the customer base in the last several months as Claude Code and Claude Cowork have, you know, proliferated globally pretty rapidly? In other words, just curious, what are your customer conversations like regarding those products? You know, they do bring forward some advancements in, you know, code generation, no-code, low-code, agentic. I'm wondering if some of your customers are maybe using them in conjunction with monday.com or maybe something that you just don't see popping up too much.

Speaker #4: In other words, I'm just curious what are your customer conversations like regarding those products? They do bring forward some advancements in code generation, no-code, low-code, agentic.

Mark Murphy: In other words, just curious, what are your customer conversations like regarding those products? You know, they do bring forward some advancements in, you know, code generation, no-code, low-code, agentic. I'm wondering if some of your customers are maybe using them in conjunction with monday.com or maybe something that you just don't see popping up too much.

Speaker #4: I'm wondering if some of your customers are maybe using them in conjunction with Monday or maybe something they just don't see popping up too much.

Speaker #3: Yeah. Hi, it's Roy. So yeah, we see a lot of customers having purchased Claude. And what our vision is, is having agents and people work together on the same platform.

Eliran Glazer: Yeah. Hi, it's Roy. Yeah, we see a lot of customers having purchased Claude. What our vision is having agents and people work together on the same platform, and that also includes external agents. If you noticed, we opened up the platform completely to have any agent that is even external to monday sign up on itself and get an account, a seat. That touches what Eran said on the hybrid model of having agents, whether they are external, they will have seats. Our internal agents, which work really well within the monday platform and also external with other platforms. This is the future we see, and that's, like, perfectly aligned, and it's great to see adoption of AI.

Roy Mann: Yeah. Hi, it's Roy. Yeah, we see a lot of customers having purchased Claude. What our vision is having agents and people work together on the same platform, and that also includes external agents. If you noticed, we opened up the platform completely to have any agent that is even external to monday sign up on itself and get an account, a seat.

Speaker #3: And that also includes external agents. So if you noticed, we opened up the platform completely to have any agent that is even external to Monday sign up on itself and get an account, a seat.

Speaker #3: And so that touches what Ron said on the hybrid model of having agents, whether they are external, they will have seats. And our internal agents, which work really well within the Monday platform and also external with other platforms.

Roy Mann: That touches what Eran said on the hybrid model of having agents, whether they are external, they will have seats. Our internal agents, which work really well within the monday platform and also external with other platforms. This is the future we see, and that's, like, perfectly aligned, and it's great to see adoption of AI.

Speaker #3: So this is the future we see. And that's like a perfectly aligned and it's great to see adoption of AI.

Speaker #4: Maybe I'll just add on top of that, I think there's a big difference between people using Claude, Code, or equivalent products on their own.

Eran Zinman: Maybe I'll just add on top of that. I think there's a big difference between people using Claude Code or equivalent products on their own, and using that around work with other people in collaboration. We see a lot of customers. I think, you know, agents essentially is, it's an amazing technology. It can be used in different ways. I think where we shine is exactly how customers wanna adopt it in a way that can integrate in their work, working with other people, and native agents built within a work platform. I think a lot of our customers are looking for a solution like that, where they can leverage AI, and put that into their existing workflows.

Speaker #4: And using that around work with other people in collaboration, and we see a lot of customers. I think agents essentially is an amazing technology.

Speaker #4: It can be used in different ways. But I think where we shine is exactly how customers want to adopt it in a way that kind of integrates in their work, working with other people.

Eran Zinman: It can be used in different ways. I think where we shine is exactly how customers wanna adopt it in a way that can integrate in their work, working with other people, and native agents built within a work platform. I think a lot of our customers are looking for a solution like that, where they can leverage AI, and put that into their existing workflows.

Speaker #4: And native agents built within a work platform. So I think a lot of our customers are looking for a solution like that. We're going to leverage AI and put that into their existing workflows.

Speaker #3: Okay. And then as a quick follow-up, the stat that shows 10% of the new ARR in Q1 was driven by AI. It's pretty impressive.

Mark Murphy: Okay. As a quick follow-up, the stat that shows 10% of net new ARR in Q1 was driven by AI, it's pretty impressive. Can you drill down into the stats so we just understand, you know, how are you deriving that? What are you counting in there? Is it monday vibe? Is it the Agents of AI workflows? Is it the AI credit packs? If someone upgrades to Pro or Enterprise and you deem that to be, you know, AI influenced or relating to some AI project, would you count something like that in there, et cetera?

Speaker #3: Could you drill down into the stats? So So we just understand how are you deriving that? What are you counting in there? Is it Monday vibe?

Speaker #3: Is it the agents that AI workflows? Is it the AI credit packs? If someone upgrades to Pro or Enterprise, and you deem that to be AI-influenced or relating to some AI project, would you count something like that in there, etc.?

Speaker #4: Yeah. Hi, this is Ron. So when we say AI contribution, we mean direct contribution, not contribution made possible by AI. Currently, it doesn't include the agents product because it was just released about a week ago.

Eran Zinman: Yeah. Hi, this is Eran. When we say AI contribution, we mean direct contribution, not contribution made possible by AI. Currently, it doesn't include the agent product because it was just released about 1 week ago. Currently, what drives the AI revenue is our existing offering, including Vibe, AI Blocks, Sidekick, and so on. Obviously with agents, we have expectations for this to rise going forward, but it's still early days.

Speaker #4: Currently, what drives the AI revenue is our existing offering, including Vibe, AI Blocks, Psychic, and so on. Obviously, with agents, we have expectations for this to rise going forward, but it's still early days.

Speaker #3: Thank you.

Mark Murphy: Thank you.

Speaker #2: Next question comes from the line of Howard Ma with Guggenheim Securities. Your line is open.

Operator 2: Next question comes from the line of Howard Ma with Guggenheim Securities. Your line is open.

Operator: Next question comes from the line of Howard Ma with Guggenheim Securities. Your line is open.

Speaker #4: Hey, thanks. I want to add my congratulations on a strong quarter as well. I want to ask about pricing and packaging. If we look six months from now, so heading into 2027, how much of your customer base do you think will be on this new seat base plus usage-based pricing model?

Howard Ma: Hey, thanks. I wanna add my congratulations on a strong quarter as well. I wanna ask about pricing and packaging. If we look 6 months from now, so heading into 2027, how much of your customer base do you think will be on this new seat-based plus usage-based pricing model? Do you expect different adoption trends between mid-market versus large enterprise? One more part too is where does OneAI fit into pricing? Will it be a separate add-on?

Speaker #4: And do you expect different adoption trends between mid-market versus large enterprise? And one more part too—where does OneAI fit into pricing? Will it be a separate add-on?

Speaker #3: Yeah. So hi, this is Ron. So look, as I said, we opening up the ability to purchase agents from new customers. We feel the adoption for existing ones is going to be very gradual.

Eran Zinman: Hi, this is Eran. As I said, we opening up the ability to purchase agents for new customers. We feel the adoption for existing ones are going to be very gradual, so it's very hard to estimate that right now. I think we'll be able to provide more color going forward. New customers will buy both seats and AI credits. Again, it's really hard to give any more information about this right now. I would say that we're very excited for the OneAI acquisition. It's a very strong team with a lot of special knowledge about voice agents. We plan to integrate that deeply into our AI work platform, also into our CRM.

Speaker #3: So it's very hard to estimate that right now. I think we'll be able to provide more color going forward. New customers will buy both seats and AI credits.

Speaker #3: But again, it's really hard to give any more information about this right now. I would say that we're very excited for the OneAI acquisition.

Speaker #3: It's a very strong team. With a lot of special knowledge about voice agents. We plan to integrate that deeply into our AI work platform.

Speaker #3: Also into our CRM. In terms of the commercial fit, we're still working through the precise packaging and pricing. But definitely, it's going to be part of our AI credit consumption model.

Eran Zinman: In terms of the commercial fit, we're still working through the precise packaging and pricing. Definitely it's gonna be part of our AI credit consumption model. Overall, I think it's a great addition to the team. They bring a lot of knowledge and expertise. I think overall voice, we need to separate the technology from the adoption. Adoption is very complex among every customer, and I think they bring a lot of knowledge and expertise to help drive more adoption within our existing customer base.

Speaker #3: So overall, I think it's a great addition to the team. They bring a lot of knowledge and expertise. I think overall voice we need to separate the technology from the adoption.

Speaker #3: Adoption is very complex among every customer. And I think they bring a lot of knowledge and expertise to help drive more adoption within our existing customer base.

Speaker #4: Okay, got it. Thank you, Ron. And as a follow-up for Eliran, I want to ask about the expectation for headcount being flattish this year.

Howard Ma: Okay. Got it. Thank you, Eran. As a follow-up for Eliran, I wanna ask about your expectation for headcount being flattish this year. I think last quarter you had called out headwinds from the Israeli shekel appreciation, foregone interest payments due to share buybacks and cash taxes. I think those are the three items. I think the headcount being flat should give you a lot of cushion relative to those headwinds, unless there are any other headwinds that we should consider.

Speaker #4: I think last quarter you had called out headwinds from the Israeli shekel appreciation, foregone interest payments due to share buybacks, and cash taxes. I think those are the three items.

Speaker #4: I think the headcount being flat should give you a lot of cushion relative to those headwinds unless there are any other headwinds that we should consider.

Speaker #3: Yeah, hi. So, with regards to headcount being flat, this is being staged throughout the year. So there is still the impact of the hiring that we have done in prior years.

Eliran Glazer: Yeah. Hi. With regards to headcount being flat, this is being staged throughout the year. There is still the impact of the hiring that we have done in prior years, and the fact that the shekel is strong versus the dollar. There is going to be some benefit from that, but we're going to see it more into going into next year rather than this year.

Speaker #3: And the fact that the shekel is strong versus the dollar, so there is going to be some benefit from that. But we're going to see it more going into next year rather than this year.

Speaker #4: Okay. Thank you.

Howard Ma: Okay. Thank you.

Speaker #2: Next question comes from the line of Steve Anders with Citi. Your line is open.

Operator 2: Next question comes from the line of Steven Enders with Citi. Your line is open.

Operator: Next question comes from the line of Steven Enders with Citi. Your line is open.

Speaker #3: Okay. Great. Thanks for taking the questions. Questions here. Maybe just follow it up on some of the guide philosophy. And I think try to understand a little bit better just the upside that you saw this quarter.

Steven Enders: Okay. Great. Thanks for taking the questions here. Maybe just follow it up on some of the guide philosophy, I think, you know, trying to understand a little bit better just the upside that you saw this quarter. I guess, A, like, what was the kinda key factors that drove the revenue upside? Then I guess, B, kinda moving forward, how should we think about, you know, I guess the kind of what's assumed there? Maybe what's different in the guide velocity versus what we saw in Q1?

Speaker #3: I guess, A, what was the kind of key factors that drove the revenue upside? And then, I guess, B, kind of moving forward, how should we think about, I guess, the kind of what's kind of assumed there?

Speaker #3: Maybe what's different in the guide philosophy versus what we saw in 1Q?

Speaker #4: Hi, Steve. This is Eliron. So nothing has changed since what we have provided in Q1. But what we have seen is the outperformance was broad-based.

Eliran Glazer: Hi, Steve. This is Eliran. Nothing has changed since what we have provided in Q1, but what we have seen is the outperformance was broad-based. It wasn't driven by any single segment and, you know, core to region, it was broad-based. Of course, up-market momentum remains strong, as Casey spoke about. We have record net adds of 500,000, and we continue to grow up market. Obviously the AI contribution, as we mentioned, 10% of the net new ARR approximately is, you know, coming from AI. This is encouraging drivers that kind of drove the results and the beat for this quarter.

Speaker #4: It wasn't driven by any single segment. And court or region, it was broad-based. Of course, upmarket momentum remained strong. It's the case we spoke about.

Speaker #4: We have record net heads of 500K. And we continue to grow upmarket. And obviously, the AI contribution as we mentioned, 10% of the net new ARR, approximately is coming from AI.

Speaker #4: So these are encouraging drivers that kind of drove the results and the beat for this quarter.

Speaker #3: Okay. Okay. That makes sense. And then on, I guess, I want to follow up on some of the agents discussion. And just kind of curious to how you're kind of viewing the monetization angle for both first-party agents and then also for third-party and, I guess, kind of where you kind of feel like you have the right to win on using Monday homegrown agents versus where it makes sense for third-party agents to be utilized instead.

Steven Enders: Okay. Okay, that makes sense. On, I guess I wanna follow up on some of the agents discussion and just kinda curious to how you're kind of viewing the monetization angle for both first-party agents and also for third-party and I guess kind of where you kind of feel like you have the right to win on, you know, using monday homegrown agents versus where it makes sense for third-party agents to be utilized instead.

Speaker #4: Yeah, hi, it's Roy. So we see that agents are going to be everywhere. Really, people will have them for many different things—like personal assistants, and maybe other different agents.

Roy Mann: Yeah, hi, it's Roy. We see that agents are going to be everywhere. Like, really, people will have them for many different things like personal assistants and maybe other different agents. Those, we wanna allow them into monday to help people manage whatever they want to manage, whether it's even to know what's going on. monday's own agents are really good at execution and analyzing and executing work and doing that together with other people. The collaboration part being built on top of monday give them access to all the data seamlessly, and they're out of the box working really well while people can customize them to do any kind of work and also connect them to other platforms.

Speaker #4: And those, we want to allow them into monday to help people manage whatever they want to manage, whether it's even to know what's going on.

Speaker #4: Monday's own agents are really, really good at execution. And analyzing and executing work. And doing that together with other people. So the collaboration part being built on top of Monday gives them access to all the data seamlessly.

Speaker #4: And they're out of the box working really well. While people can customize them to do any kind of work. And also connect them to other platforms.

Speaker #4: So we feel as part of the future vision we have of doing the work and not only managing the work, those agents are going to be the best collaborative agents between people and agents together.

Eliran Glazer: We feel as part of the future vision we have of doing the work and not only managing the work, those agents are going to be the best collaborative agents between people and agents together.

Speaker #3: Okay. Perfect. Good to hear. And thanks for taking the questions.

Steven Enders: Okay, perfect. Good to good to hear and thanks for taking the questions.

Speaker #2: Next question comes from the line of Brent Thiel with Jefferies. Your line is open.

Operator 2: Next question comes from the line of Brent Thill with Jefferies. Your line is open.

Operator: Next question comes from the line of Brent Thill with Jefferies. Your line is open.

Speaker #5: Hi, thank you. This is John Bjørn for Brent Thiel. Two questions. On the AI credit pricing, the table has a lot of parameters depending on what type of usage there is.

John Thill: Hi, thank you. This is John Thill for Brent Thill. Two questions. On the AI credit pricing, the table has a lot of parameters depending on what type of usage there is. Even at $0.01 per credit, I mean, that could balloon out for customers. I'm wondering how, you know, customer will manage it. What's been the customer reception on that new pricing table? Second question, I don't know if you can talk a little bit about the in-quarter NDR since I guess the 100,000+ has come down a little bit, and you did allude to pricing lapping the factor. Thank you.

John Bayonne: Hi, thank you. This is John Bayonne for Brent Thill. Two questions. On the AI credit pricing, the table has a lot of parameters depending on what type of usage there is. Even at $0.01 per credit, I mean, that could balloon out for customers. I'm wondering how, you know, customer will manage it. What's been the customer reception on that new pricing table? Second question, I don't know if you can talk a little bit about the in-quarter NDR since I guess the 100,000+ has come down a little bit, and you did allude to pricing lapping the factor. Thank you.

Speaker #5: But even at one cent per credit, I mean, that could balloon up for customers. So I'm wondering how customers will measure—what's been the customer reception on that new pricing table?

Speaker #5: And then, second question, I don't know if you can talk a little bit about the in-quarter NDR, since I guess the $100,000-plus has come down a little bit.

Speaker #5: And you did a little bit of pricing lapping the fact that. Thank you.

Speaker #4: So this is Casey George. So as it relates to the pricing model for AI credits, so it's been clear from our customers that they want transparency and control and governance of those credits.

Casey George: As it relates, this is Casey George. As it relates to the pricing model for AI credits, it's been clear from our customers that they want transparency and control and governance of those credits. We're giving them that as part of the platform, right? They can see exactly who's using the credits, what is it used for. They can scope out the work that's being done so that they can plan accordingly for their AI credit usage. We're seeing that as a big driver for our platform. We continue to get feedback from customers that that's what they wanna see, so we're giving that power to the customers so that they can govern their credits. I'll hand it back to Eran to answer the follow-on question.

Speaker #4: So we are giving them that as part of the platform, right? So they can see exactly who's using the credits, what is it used for.

Speaker #4: They can scope out the work that's being done so that they can plan accordingly for their AI credit usage. So we're seeing that as a big driver for our platform.

Casey George: They can scope out the work that's being done so that they can plan accordingly for their AI credit usage. We're seeing that as a big driver for our platform. We continue to get feedback from customers that that's what they wanna see, so we're giving that power to the customers so that they can govern their credits. I'll hand it back to Eran to answer the follow-on question.

Speaker #4: We continue to get feedback from customers that that's what they want to see. So we're giving that power to the customers so that they can govern their credits.

Speaker #4: I'll hand it back to Ron to answer the follow-on question. This is Eliron. Hi, John. I will answer the question on the NDR. So John, to your question, so first of all, lending expense dynamics, so we are seeing recent enterprise deals that are lending bigger.

Eliran Glazer: This is Eliran. Hi, John. I will answer the question on the NDR. John, to your question. First of all, land and expand dynamics, we are seeing recent enterprise deals. They are lending bigger. But larger customers typically commit to a multi-year agreement with more structured expansion. If you think about the 100K customers, they are lending and taking multi-year deals. This is, you know, one of the reasons why we're saying that the 100K NDR is slightly below the 50K one. It's not related to churn. Actually, our growth retention is at all-time high.

Speaker #4: But larger customers typically commit to a multi-year agreement with more structured expansion. So if you think about the 100K customers, they are lending and taking a multi-year deal.

Speaker #4: So this is one of the reasons why we're saying that 100K NDR is slightly below the 50K one. It's not related to churn. Actually, our growth retention is at all time high.

Speaker #4: And we expect, and it's important to say, we expect one or two percent of temporary pressure for the upmarket NDR metrics for the remainder of fiscal year 2026.

Eliran Glazer: It's important to say we expect a 1% or 2% of temporary pressure for the upmarket NDR metrics for the remainder of fiscal year 2026, as we'll have the pricing benefit that we spoke about.

Speaker #4: As we left the pricing benefit that we spoke about.

Speaker #3: Thank you.

John Thill: Thank you.

John Bayonne: Thank you.

Speaker #2: Next question comes from the line of DJ Heinz with Canaccord. Your line is open.

Operator 2: Next question comes from the line of DJ Hynes with Canaccord. Your line is open.

Operator: Next question comes from the line of DJ Hynes with Canaccord. Your line is open.

Speaker #6: Hey, thank you, guys. And congrats on the nice quarter. Eliron, does the addition of usage-based elements into the model more effectively match your revenue with your cost tied to AI so that we could see better gross margin preservation over time?

DJ Hynes: Hey, thank you, guys, and congrats on a nice quarter. Eliran, does the addition of usage-based elements into the model more effectively match your revenue with your cost tied to AI so that we could see better gross margin preservation over time?

Speaker #4: So we said when we were in the investor that we said that we expect gross margin to be mid-80s. We were used to 90%.

Eliran Glazer: We said, you know, when we were in the investor day, we said that we expect gross margin to be mid-80s. We were used to 90%, because of the computing cost of AI, we said that we are expecting for the short term or for, you know, the foreseen future to have some impact. Overall, again, we are not seeing yet a significant impact on our gross margin, we believe there is going to be additional cost regarding computing costs related to AI.

Speaker #4: But because of the computing cost of AI, we said that we are expecting for the short-term or for the foreseen future to have some impact.

Speaker #4: Overall, again, we're not seeing yet a significant impact on our gross margin. But we believe there is going to be additional cost regarding computing cost related to AI.

Speaker #6: Okay. And then Ron, maybe following up with you one on the product side. Does the addition of voice capabilities with One AI push you any closer to turning service into more of a customer-facing application over time?

David Stone: Okay. Eran, maybe following up with you, one on the product side. Does the addition of voice capabilities with OneAI push you any closer to turning service into more of a customer-facing application over time?

DJ Hynes: Okay. Eran, maybe following up with you, one on the product side. Does the addition of voice capabilities with OneAI push you any closer to turning service into more of a customer-facing application over time?

Speaker #4: Yeah. So I think currently, we're going to focus mostly on the integration into CRM and network platform. Going forward, it's definitely also an opportunity for the service team.

Eran Zinman: Yeah. I think, currently, we're gonna focus mostly on the integration into CRM and network platform. Going forward, it definitely also an opportunity for the service team. But overall, I think, you know, voice capabilities are important, almost in any product right now. Like I said, the hardest part is not using the technology, but actually customize it to your own needs. I think both with agents and voice, this is exactly where we can shine. I think people are amazed at the technology, but it's very hard to use it, especially when it's used through a prompt or a very hard-to-use user interface. I think what Monday really can help customers adopt agents and also voice agents, in a very easy and intuitive way.

Speaker #4: But overall, I think voice capabilities are important almost in any product right now. And like I said, the hardest part is not using the technology, but actually customize it to your own needs.

Speaker #4: And I think both with agents and voice, this is exactly where we can shine. I think people are amazed by the technology, but it's very hard to use it, especially when it's used through a prompt or a very hard-to-use user interface.

Eran Zinman: I think people are amazed at the technology, but it's very hard to use it, especially when it's used through a prompt or a very hard-to-use user interface. I think what Monday really can help customers adopt agents and also voice agents, in a very easy and intuitive way.

Speaker #4: And I think Monday really can help customers adopt agents and also voice agents in a very easy and intuitive way.

Speaker #6: Yeah. Okay. Thank you.

David Stone: Yeah. Okay. Thank you.

DJ Hynes: Yeah. Okay. Thank you.

Speaker #2: Next question comes from the line of Alex Zukin with Wolf Research. Your line is open.

Operator 2: Next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.

Operator: Next question comes from the line of Alex Zukin with Wolfe Research. Your line is open.

Speaker #7: Hey, guys. Thanks for taking the question. Maybe the first one on new product ARR. It was north of 11% now. It continues to grow nicely.

Alex Zukin: Hey, guys. Thanks for taking the question. Maybe the first one on new product ARR, it was north of 11% now it continues to grow nicely. Maybe just can you dig in a little bit on the interplay between CRM and service? Maybe share some details on that progress in the quarter.

Speaker #7: But maybe just can you dig in a little bit on the interplay between CRM and service? Maybe share some details on that progress in the quarter.

Speaker #4: Yeah. So hi, this is Ron. So I'll just give a kind of high-level number. So as we said, new products account for over 11% of our ARR.

Eran Zinman: Hi, this is Eran. I'll just give a kinda high-level number. As we said, new products account for over 11% of our ARR. We see significant opportunity to accelerate across sale presentation, especially mid-market segment. We see more and more customers adopting more than 2 products and even more. CRM, as we said, we surpassed $100 million. We continue to grow very nicely, mostly in the SMB segment. The new product campaigns is off to a strong start as well. In regards to service, we still see 70% of our ARR coming from big market and enterprise. The ACVs is the highest across all products. Most of the growth with service is driven by seat expansion and cross-sell with customer support workflows.

Speaker #4: We see significant opportunity to accelerate across sales presentation especially in mid-market segment. We see more and more customers adopting more than two products and even more.

Speaker #4: CRM, as we said, we suppress 100 million. We continue to grow very nicely. Mostly in the SMB segment. And the new products campaigns is off to a strong start as well.

Eran Zinman: The new product campaigns is off to a strong start as well. In regards to service, we still see 70% of our ARR coming from big market and enterprise. The ACVs is the highest across all products. Most of the growth with service is driven by seat expansion and cross-sell with customer support workflows.

Speaker #4: In regards to service, we still see 70% of our ARR coming from mid-market and enterprise. So the ACVs is the highest across all products.

Speaker #4: Most of the growth with service is driven by seed expansion. And cross-sell, with customer support workflows. So overall, we continue to see good demand across CRM and service.

Eliran Glazer: Overall, you know, we continue to see good demand across CRM and service. We continue to see acceleration, and not acceleration, but expansion of seats and usage. Very happy with the adoption so far.

Eran Zinman: Overall, you know, we continue to see good demand across CRM and service. We continue to see acceleration, and not acceleration, but expansion of seats and usage. Very happy with the adoption so far.

Speaker #4: We continue to see acceleration. And acceleration, but expansion of seeds and usage. And very happy with the adoption so far.

Speaker #6: Okay. Perfect. And then maybe just a second one. The comments on maybe why the 50,000 and 100,000 K ARR sequential ads were a bit lower.

Alex Zukin: Okay, perfect. Maybe just a second one. The comments on maybe why the 50,000 and 100,000 ARR sequential adds were a bit lower. I realize some of that is seasonality, but I think in the last six, seven months, you talked about shifting performance marketing from lower end resources towards the upmarket higher end. Maybe just comment on the performance of that shift. Is that driving outperformance? Is that something we'll see later this year as seasonality improves?

Speaker #6: I realize some of that is seasonality, but I think in the last six, seven months, you talked about shifting performance marketing from lower-end resources towards the upmarket, higher-end.

Speaker #6: Maybe just comment on the performance of that shift. Is that driving out performance? Is that something we'll see later this year as seasonality improves?

Speaker #4: Yeah. Hi, Alex. This is Eliron. So we said that there is some seasonality usually with Q4 and Q2 are the strongest upmarket performance. We saw a record net ads of 100K in Q4 of last year.

Eliran Glazer: Hi, Alex. This is Eliran. We said that there is some seasonality, usually with Q4 and Q2 are the strongest upmarket performance. We saw a record net adds of 100K in Q4 of last year, there was possibly some pull forward. When we look at the mid and upmarket metrics, we look at them as a whole. If you think about the 50K and the 500K customers, they were very healthy with 500K net adds at historical highs. We look at them all together and this is what kind of the way we view it.

Speaker #4: So there was possibly some pull-forward. And when we look at the mid and upmarket metrics, we look at them as a whole. So, if you think about the $50K and the $500K customers, they were very healthy, with $500K net adds at historical highs.

Speaker #4: So we look at them all together, and this is kind of the way we view it.

Speaker #6: Great. Thank you, guys.

Alex Zukin: Great. Thank you, guys.

Speaker #2: Next question comes from the line of Taylor McGeaneys with UBS. Your line is open.

Operator 2: Next question comes from the line of Taylor McGinnis with UBS. Your line is open.

Operator: Next question comes from the line of Taylor McGinnis with UBS. Your line is open.

Speaker #8: Yeah. Hi. Thanks so much. For taking my question. So you mentioned that the strength in the quarter was broad-based, but it did seem like a bit of a turnaround from the trends that we saw last quarter in the upside was higher.

Taylor McGinnis: Yeah. Hi. Thanks so much for taking my question. You mentioned that the strength in the quarter was broad-based, but it did seem like a bit of a turnaround from the trends that we saw last quarter and the upside was higher. I guess, anything surprise you in the quarter in terms of areas that were stronger than expected? When you think you know about some of those trends, maybe you could unpack what you're seeing at the start of Q2 as well. Not to throw too many questions in there, but just a housekeeping item. Do you mind unpacking FX impact to revenue in the quarter and what's being expected for the full year guide?

Speaker #8: So, I guess—anything surprise you in the quarter in terms of areas that were stronger than expected? And then, when you think about some of those trends, maybe you could unpack what you're seeing at the start of Q2 as well.

Taylor McGinnis: When you think you know about some of those trends, maybe you could unpack what you're seeing at the start of Q2 as well. Not to throw too many questions in there, but just a housekeeping item. Do you mind unpacking FX impact to revenue in the quarter and what's being expected for the full year guide?

Speaker #8: And then, not to throw too many questions in there, but just a housekeeping item: do you mind unpacking FX impact to revenue in the quarter, and what's being expected for the full-year guide?

Speaker #4: Hi, Taylor. This is Eliran. So, as we said, I think the positive surprise was the AI contribution, with ARR growing to almost 10% of net added ARR coming from the AI product.

Eliran Glazer: Hi, Taylor. This is Eliran. As we said, I think the positive surprise was AI contribution with the ARR growing to almost 10% of net added ARR coming from the AI product. This is something that we are very pleased with. Other than that, we continue to see the upmarket momentum that we have seen in the past. You know, enterprise customers continue to grow with the 500K net adds and numbers. With regards to FX, we did see small tailwinds from FX in Q1, but it didn't impact the overall reported growth rate. It was very small.

Speaker #4: And this is something that we are very pleased with. Other than that, we continue to see the upmarket momentum. That we have seen in the past.

Speaker #4: And enterprise customers continue to grow with the 500K net ads and the numbers. With regards to FX, we did see small tailwinds from FX in Q1, but it didn't impact the overall reported growth rate.

Speaker #4: So it was very small.

Speaker #8: Great. Thank you so much.

Taylor McGinnis: Great. Thank you so much.

Speaker #2: Next question comes from the line of Alan Verkovsky with BTIG. Your line is open.

Operator 2: Next question comes from the line of Allan Verkhovski with BTIG. Your line is open.

Operator: Next question comes from the line of Allan Verkhovski with BTIG. Your line is open.

Speaker #6: Hey there, thanks for taking the question. And congrats on the strong quarter here. Can you talk about the level of engagement you've seen with your MCP?

Allan Verkhovski: Hey there. Thanks for taking the question and congrats on the strong quarter here. Can you talk about the level of engagement you've seen with your MCP? What types of customers you've seen use it more? Are there any trends you've seen thus far in terms of expansion activity of customers that have used MCP? I've got a quick follow-up.

Speaker #6: What types of customers have you seen use it more? Are there any trends you've seen thus far in terms of expansion activity of customers that have used the MCP?

Speaker #6: And then I've got a quick follow-up.

Speaker #4: Yeah. Hi. This is Ron. So yeah, we see some usage through the MCP protocol. And overall, we see more and more agents signing up to the platform.

Eran Zinman: Yeah. Hi, this is Eran. We see some usage through the MCP protocol and overall, like, we see more and more agents sign up to the platform. We actually did invest a lot of work making monday accessible to agents and make it easy to agents to use the platform and sign up. But it's still not very significant numbers. Yeah, it's small numbers, but like the ones who use it, have a way stronger retention profile.

Speaker #4: We actually did invest a lot of work making Monday accessible to agents and make it easy to agents to use the platform and sign up.

Speaker #4: But it's still not very significant numbers.

Speaker #6: Yeah, it's small numbers, but the ones who use it have a way stronger retention profile. Got it. And then maybe just as a follow-up to an earlier one about your guidance: it looks like the Q2 revenue guide implies lower sequential growth than Q1, despite being a seasonally stronger quarter.

Allan Verkhovski: Got it. Maybe just as a follow-up to an earlier one about your guidance, as it looks like the Q2 revenue guide implies lower sequential growth in Q1 despite being a seasonally stronger quarter, can you just unpack, like what are you factoring in there? How much of it is prudence versus maybe potential impacts from any new dynamics you're seeing now?

Speaker #6: So can you just unpack what are you factoring in there? How much of it is prudence versus maybe potential impacts from any new dynamics you're seeing there?

Speaker #4: Hi. This is Eliron. So what we said is basically that we provide our guidance based on everything that we know today. And we believe that with the investment that we are doing on AI and the fact that we're going to see the impact throughout the year, we remain focused basically on managing the year expectation rather than looking at just the next quarter.

Eliran Glazer: Hi, this is Eliran. What we said is basically that we provide our guidance based on everything that we know today. We believe that with the investment that we're doing on AI and the fact that we're going to see the impact throughout the year, we remain focused basically on managing the year expectation rather than looking at just the next quarter. On the cost side, we're investing in our product and GTM capabilities. The potential increase of expenses from AI, as I mentioned earlier, compute, we are expecting this to be increasing throughout the year. There is a, you know, there is an inherent uncertainty on how that revenue ramps when we are thinking about throughout the rest of the year.

Speaker #4: So on the cost side, we're investing in our product and GTN capabilities. The potential increase of expenses from AI, as I mentioned earlier, compute, we are expecting this to be increasing throughout the year.

Eliran Glazer: On the cost side, we're investing in our product and GTM capabilities. The potential increase of expenses from AI, as I mentioned earlier, compute, we are expecting this to be increasing throughout the year. There is a, you know, there is an inherent uncertainty on how that revenue ramps when we are thinking about throughout the rest of the year.

Speaker #4: And there is an inherent uncertainty on how that revenue ramps when we are thinking about throughout the rest of the year. So, when we take all of this together into account, our guidance does imply some moderation in H2.

Eliran Glazer: When we take all of this together into account, our guidance does imply some moderation in H2.

Speaker #6: Perfect. Thanks, guys.

Allan Verkhovski: Perfect. Thanks, guys.

Speaker #2: And our last question comes from the line of Matt Bullock with Bank of America. Your line is open.

Operator 2: Our last question comes from the line of Matt Bullock with Bank of America.

Operator: Our last question comes from the line of Matt Bullock with Bank of America.

Speaker #6: Great, thanks for taking the question. I wanted to follow up on the 10% of net new ARR coming from AI products. It seems like it was one of the sources of upside in the first quarter.

Matt Bullock: Great. Thanks for taking the question. I wanted to follow up on the 10% of net new ARR coming from AI products. Seems like it was one of the sources of upside in Q1. Maybe it'd be helpful if you could help us think through the assumptions for consumption-based revenue or, you know, AI product revenue for the 2026 guide and how to think about that as a potential upside lever as we move throughout the year.

Speaker #6: So maybe it'd be helpful if you could help us think through the assumptions for consumption-based revenue or AI product revenue for the 2026 guide, and how to think about that as a potential upside lever as we move throughout the year.

Speaker #4: Yeah. Hi, Matt. This is Ron. So look, as I said, all the AI revenue that we got this quarter was not from AI agents and consumption.

Eran Zinman: Yeah. Hi, Matt, this is Eran Zinman. As I said, all the AI revenue that we got this quarter was not from AI agents and consumption, mostly driven by monday vibe and AI Blocks and monday sidekick. We still don't know how to model and expect revenue coming from agents and token-based usage. Happy to give for some more color next quarter, but it's really hard to kind of model it out right now.

Speaker #4: Mostly driven by Vive and AI blogs, and Psyche. We still don't know how to model and expect the revenue coming from agents and AI token-based usage.

Speaker #4: Happy to give some more color next quarter, but it's really hard to kind of model it out right now.

Speaker #6: Understood. And then just one quick follow-up, if I could as well. Can you just help me think through some of the incentives you're going to be providing the enterprise customers to migrate them over to the new C++ usage model?

Matt Bullock: Understood. Then just one quick follow-up, if I could as well. Can you just help me think through some of the incentives you're gonna be providing the enterprise customers to migrate them over to the new SeatsPlus usage model?

Speaker #4: Yeah. Happy to. So our customers today are buying AI capabilities à la carte. We'll continue to make that offer available to them, but we'll also looking at ways where they can buy just like our new customers where they get incentives for buying AI packages along with their products.

Casey George: Yeah, happy to. Our customers today are buying AI capabilities à la carte. We'll continue to make that offer available to them, but we're also looking at ways for where they can buy, just like our new customers, where they get incentives for buying AI packages along with their products. That's how we're looking at it. Those have not been announced yet. We'll look to do that. Again, it's an opt-in policy for our existing customers. We are not forcing any of our existing customers to move, but again, we're gonna make it highly incentivized for them to do that.

Speaker #4: So that's how we're looking at it. Those have not been announced yet. We'll look to do that. And again, it's an opt-in policy for our existing customers.

Speaker #4: We are not forcing any of our existing customers to move. But again, we're going to make it highly incentivized for them to do that.

Speaker #6: Yeah. And just to add to that is it's not a migration. It's like a flip the switch kind of thing. There is nothing they really need to do other than agree to it.

Eran Zinman: Yeah. Just to add to that is, it's not a migration. It's like a flip the switch kind of thing. There is nothing they really need to do other than agree to it. There's no sort of migrating anything.

Speaker #6: So there's no sort of migrating anything. Understood. Thank you.

Matt Bullock: Understood. Thank you.

Operator 2: Ladies and gentlemen, that concludes the question and answer session. Thank you all for joining. You may now disconnect.

Operator: Ladies and gentlemen, that concludes the question and answer session. Thank you all for joining. You may now disconnect.