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DATE

Monday, November 10, 2025 at 8:30 a.m. ET

CALL PARTICIPANTS

  • Co-Chief Executive Officer & Co-Founder — Eran Zinman
  • Chief Executive Officer & Co-Founder — Roy Mann
  • Chief Financial Officer — Eliran Glazer
  • Chief Revenue Officer — Casey George
  • Operator

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RISKS

  • Guidance for Q4 — Eliran Glazer noted that “the more measured bit reflects timing effects as we rebalance investments towards ROI areas,” indicating near-term revenue guidance is lower due to longer sales cycles and reallocation of spend to upmarket channels.
  • Choppiness in Paid Channels — Eran Zinman stated, “top-of-funnel trends were choppy overall. We saw some continued volatility in paid search performance,” directly highlighting acquisition headwinds in direct-response marketing channels.
  • Longer Upmarket Sales Cycles — Casey George said, “obviously, you create somewhat of a hockey stick in the quarter. And in the year. As we progress upmarket, we continue to see that phenomenon play out,” explicitly noting more pronounced back-weighted deal closures and risk of forecasting variability.

TAKEAWAYS

  • Total Revenue -- $317 million, representing 26% year-over-year growth.
  • Net Dollar Retention (NDR) -- 111% in Q3; management expects this level to remain stable for fiscal year 2025.
  • Non-GAAP Operating Income -- $47.5 million, a record and up from $32.2 million in the year-ago quarter, with a 15% non-GAAP operating margin.
  • Net Income -- $61.9 million, also a record, up from $45 million a year earlier.
  • Diluted Net Income Per Share -- $1.16, calculated on 53.3 million fully diluted shares.
  • Gross Margin -- 90% on a non-GAAP basis for Q3, with medium-to-long term guidance at the high 80s percentage range.
  • Adjusted Free Cash Flow -- $92.3 million with an adjusted free cash flow margin of 29% for the quarter.
  • Headcount -- 3,018 employees, a sequential increase of 151, with guidance to grow headcount approximately 30% for fiscal year 2025.
  • R&D Expense -- $57.8 million, or 18% of revenue, up from 17% in the prior-year period.
  • Sales and Marketing Expense -- $151.8 million, or 48% of revenue, down from 52% a year ago.
  • General and Administrative (G&A) Expense -- $27 million, or 9% of revenue, unchanged from the year-ago quarter.
  • Cash and Cash Equivalents -- $1.53 billion at quarter end, down from $1.59 billion at the end of Q2.
  • Marketable Securities -- $211.7 million, up from $60.1 million at the end of Q2.
  • Guidance for Q4 Revenue -- $328 million to $330 million, representing 22%-23% year-over-year growth and non-GAAP operating income of $36 million to $38 million with an 11%-12% margin.
  • Full-Year 2025 Guidance -- Revenue of $1.226 billion to $1.228 billion (26% year-over-year growth), non-GAAP operating income of $167 million to $169 million (operating margin ~14%), and adjusted free cash flow of $330 million to $334 million (adjusted free cash flow margin ~27%).
  • Multiproduct ARR Contribution -- New products account for over 10% of total annual recurring revenue (ARR), surpassing the prior 2025 goal ahead of schedule.
  • CRM ARR -- CRM product exceeded $100 million in annual recurring revenue; service product customers’ contract sizes are twice that of other product lines.
  • AI Product Adoption -- Monday Vibe saw customers create over 60,000 apps since launch in July; rapid adoption prompted tiered pricing aligned with AI usage needs.
  • RPO Growth -- Remaining Performance Obligations (RPO), a new metric disclosed, are accelerating sequentially and reflect upmarket growth and longer contract durations.

SUMMARY

Management emphasized rapid acceleration in large-account additions, specifically noting momentum among accounts at $50,000, $100,000, and $500,000 ARR thresholds. Strategic investments are shifting toward upmarket and multiproduct expansion, prompting product bundling and differentiated pricing models to enhance cross-sell and customer lifetime value. AI-driven solutions—including Monday Vibe and Agent Factory—are highlighted as major drivers of customer engagement and future monetization, with early use cases spanning workflow automation and reporting, yet with revenue recognition impact more prominent in future periods.

  • Casey George said, “only have 6% of our customers consuming more than one product, the opportunity for us is significant,” indicating substantial untapped multiproduct potential.
  • Annual and multiyear contracts are rising, with Eliran Glazer disclosing annual contracts now represent 70% of ARR (up from 65%), and multiyear contracts have grown from 5% to 13% over five years.
  • Management clarified the slight restatement and adjustment of RPO following auditor review for enhanced period-over-period consistency and transparency.
  • Partner ecosystems, especially in APJ and LatAm, are described as increasingly essential for sales execution and new product adoption, with expanded partner onboarding in response to product suite growth.
  • Internal salesforce productivity is improving through deployment of the company’s own AI technology, with expectations for continued advances as AI tools mature and adoption deepens internally.

INDUSTRY GLOSSARY

  • RPO (Remaining Performance Obligations): The total value of contracted future revenue not yet recognized, combining both billed and unbilled amounts, serving as an indicator of forward revenue visibility in subscription software models.
  • NDR (Net Dollar Retention): A metric reflecting retained revenue from existing customers, including upsells, expansions, downgrades, and churn, typically expressed as a percentage of starting ARR.
  • ARR (Annual Recurring Revenue): The expected recurring revenue from customer contracts normalized to a one-year period, commonly used to assess growth and recurring value in SaaS businesses.

Full Conference Call Transcript

Eran Zinman: 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 2027. We saw robust net additions of over 100k+ and 500k+ paying customers reflecting the strength of our go-to-market engine and the expanding demand of 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 engagements with our AI offering position monday.com Ltd. strongly for its next phase of growth.

Our Q3 results follow a highly successful Investor Day where we showcased our evolution into a multi-product and AI-powered platform. The event drew nearly 1,000 online participants, over four times the viewership from 2023, reinforcing investor confidence in our vision and the significant opportunity ahead as we execute toward our FY 2027 goals. Additionally, our Elevate User Conference in New York City and London reached 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 pipeline heading into 2026, setting the stage for continued customer expansion and growth.

Let me now turn it over to Eran to walk you through some of our business highlights for the quarter.

Eliran Glazer: Thank you, Roy. The investments we have made in our sales organization over the past year continue to drive strong results. We delivered solid net additions among larger customers, saw improved net dollar retention for accounts over $50,000 in ARR, and achieved accelerating growth, all reinforcing the effectiveness of our upmarket strategy and disciplined execution. We continue to rebalance our go-to-market investment towards mid-funnel channels that target larger opportunities. While these motions come with longer sales cycles, they are yielding higher quality pipeline and position us well for sustainable growth. Moving on, our multiproduct strategy is delivering strong results, expanding monday.com Ltd.'s reach across more teams and use cases.

New products now account for over 10% of total ARR, surpassing our 2025 goal ahead of schedule. New bundle offerings combining work management with CRM service and dev provide a unified, cost-efficient experience, accelerating cross-sell momentum. And within CRM, our new AI-powered monday campaigns product has seen rapid adoption since its September launch, reinforcing our vision of a connected sales and marketing suite. Since its gradual release in July, Monday Vibe has seen rapid adoption, with customers creating more than 60,000 apps to power their unique workflows. Built directly on monday.com Ltd.'s enterprise-grade infrastructure, these apps are secure, scalable, and fully integrated with granular permissions and team contexts.

To better reflect the value customers are realizing, we introduced a new pricing model that lets users select a tier aligned with their AI needs, from unlimited free access to build and test apps to paid tiers that scale as 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 are rolling out a new AI credit system in Q4, shaped by extensive customer feedback, providing a more transparent and intuitive way to scale AI usage and measure impact across organizations. This quarter's results reflect the incredible dedication of our teams and the trust our customers place in monday.com Ltd. every day. With accelerating customer expansion, record profitability, and growing enthusiasm for our AI-powered platform, we are entering the next phase of durable profitable growth that will create meaningful long-term value for shareholders. With that, I will now turn it over to Eliran to cover our financials and guidance.

Eliran Glazer: Thank you, Eliran, and thank you to everyone for joining our call. Q3 was another strong quarter for monday.com Ltd., highlighted by solid revenue growth, supported by our success with larger customers and continued improvement in operational efficiency. Total 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 2025. As a reminder, our NDR is a trailing four 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 reconciliation 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 the 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 $47.5 million in Q3, up from $32.2 million from the year-ago quarter, and operating margin was 15%.

Net income was a record of $61.9 million in Q3 2025, up from $45 million in Q3 2024. Diluted net income per share was a record $1.16 in Q3 based on 53.3 million fully diluted shares outstanding. 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. Adjusted free cash flow is defined as net cash from operating activities less cash used for property and equipment and capitalized software costs plus costs associated with the build-out and expansion of our corporate headquarters. Now let's turn to our updated outlook for fiscal year 2025. For 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 $1.226 billion to $1.228 billion, representing growth of approximately 26% year over year. We expect full-year non-GAAP operating income of $167 million to $169 million and an operating margin of approximately 14%. We expect full-year 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.

Operator: At this time, I would like to remind everyone, in order to ask a question, we ask that participants please limit themselves to one question and one follow-up question. Your first question comes from the line of Kash Rangan with Goldman Sachs. Please go ahead.

Kash Rangan: Hi. Thank you very much. Good to see the quarterly results. I am also curious to get your perspective on two things. One is as you look at the spending environment for the next calendar year, calendar '26, what is top of mind for your customers? And where does monday.com Ltd. stand in terms of spending priority? Also, secondly, when you look at the results, this looked like a smaller magnitude of beat relative to what we have come to expect of monday.com Ltd. in the past prior quarter. So if you could talk about what might be behind the numbers, is the go-to-market transition, etcetera, that hopefully was set you up for very good success in the years ahead.

But, I want to know if the go-to-market transition, the pivot towards larger deals also causes the kind of upside that we have come to expect. In the results and the guidance looking forward into the fourth quarter and the year ahead, if there is any go-to-market transition that we should be thinking about as you work through these numbers. Thank you so much.

Eran Zinman: Hey, Kash. This is Eran. Maybe just to start, before I start answering your question, I know this is your last earnings call covering us. So just want to say thank you for the whole period and the coverage throughout the year. Just to your first part of the question, and then I can defer to Eliran about guidance and Casey. So in terms of customer demand, like you mentioned, we see a transition in the business basically across customer segments, the 50k, 100k, half a million. We see acceleration. Our go-to-market strategy in terms of adding bigger accounts is working really well, and we see accelerating on all fronts.

In terms of what customers are asking for, so definitely, we see an increase in terms of our profitability. 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 learn really resonate with customers. So overall, we see a very healthy demand across all customer segments. We see healthy demand with our existing products and specifically with the new AI features that we offer and we announced during the Investor Day.

Eliran Glazer: Yeah. Thanks, Eran. Hey, Kash. It's Eliran. With regards to the guidance and in Q3 and what we provided, so the more measurable bit is mostly due to timing effect. As we rebalance investments, our higher ROI area, and it relates to your question. So we see the direct sales, the new products like Monday service CRM, and PLG channels such as video and social media actually providing higher ROI. And 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 are all accelerated in this quarter going into next year.

So this provides us a lot of confidence with regards to our next year assumptions. And maybe, Casey, you can add what is top of mind for customers next year.

Casey George: Yeah. We just finished up our world tour with Elevate. So tens of thousands of customers and partners came out to hear everything we had to offer, especially around our AI offerings. The consensus back was, you know, I am not taking full advantage of monday.com Ltd. And, obviously, when we only have 6% of our customers consuming more than one product, the opportunity for us is significant. And so as we start this multiproduct journey, which obviously has just begun, all indications are we are going to have a much more material impact on the revenue associated with customers consuming more than one product.

So at this point, it is early, but all signs and indications are that this is going to be a significant contribution for us going forward.

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

Operator: Thanks, Kash. Your next question comes from the line of Jackson Ader with KeyBanc Capital Markets. Please go ahead.

Jackson Ader: Great. Thanks for taking our questions. The first one that I had was on the move upmarket and its impact on deferred revenue or billings. As you guys keep signing kind of longer or larger customers and maybe longer-term contracts, heavily weighted towards annual and even multiyear, I would expect deferred revenue to have to outgrow recognized revenue. And so I am just curious what the dynamics are there that are causing deferred revenue to come in below revenue. Thank you.

Eliran Glazer: Hi, Jackson. It's Eliran. Just as a reminder, with regards to billings, we said that in the past, this is not the perfect measurement of our business because it is based on a cash basis, not an accrual basis. As a reminder, we tend to be more conservative on that. So therefore, there are some fluctuations with regard to that. And we think a better measurement of this is an RPO. RPO is a new metric for us that we disclosed in the Investor Day. And as you can see, it is accelerating quarter over quarter. And it also reflects the full contract value that we see going upmarket.

So we think there is going to be some timing of the billings is why it is not a perfect measurement. Therefore, we tend to see the RPO as a better measurement going into next year.

Jackson Ader: Okay. Alright. Great. That is fair. And then, what should we take from the implied growth rate here for the fourth quarter is like 20.5%, 23% or so year-over-year growth. What should we take as a signal for the right level to be thinking about 2026?

Eliran Glazer: Oh, so we are going to provide our initial expectation for fiscal year 2026 in our next quarter earnings. And I think in the Investor Day, we provided a good outline. We said that we are going to be $1.8 billion by fiscal year 2027, and we are committed to achieving this number and to the guidance we have provided during the Investor Day. So this is something that not only are we growing on the revenue, but also expecting operating and free cash flow margin to expand.

Jackson Ader: Got it. Thank you very much.

Operator: Your next question comes from the line of Arjun Bhatia with William Blair. Please go ahead.

Arjun Bhatia: Yes. Perfect. Thank you so much. I want to maybe just go back to the fact that in '26 might see some improvement if given that you are rebalancing investment. Can you just maybe elaborate a little bit on where the investment is going, what you might expect your goals are for 2026 to either reaccelerate growth? And then, I think, Eliran, I heard you say 30% increase in headcount this year. I am curious how your plans are shaping up for 2026 within that investment framework. Thank you.

Eran Zinman: Yeah. Hi, Arjun. This is Eran. So I can start. So look. We feel very confident on the strategy and how it is going so far. Specifically, I can point out our going upmarket worked really well. Just as a reminder, just three years ago, it seemed like a big stretch. But right now, the majority of the business is based on 50k, 100k, half a million dollar accounts. We see those accounts have much better retention, much more expansion, much more stability. Definitely changes the nature of the business, and we see some of that as part of the results, but we are very confident on where we are heading with those customers.

We feel the potential to do more cross-sell, more expansion over time will really pay off. In addition, as we mentioned during the Investor Day, we do a lot of investment in terms of product. We are executing in the last three or four quarters like never before. Adding a lot of AI features, functionality, those are really well received with our customer base. There is a lot of excitement. Casey mentioned Elevate. We got great feedback from customers across the board. So all in all, looking at all the investments we made and all the innovation in the product, we feel very confident in where we are headed and how our customers are using the product.

Eliran Glazer: Hey, Arjun. This is Eliran. 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. We estimate it to be around 30% growth in headcount by the end of the year, and we think that as for next year, we already said it in the Investor Day that we believe the numbers are going to be closer to 20% in terms of adding additional headcount. It is going to start to decelerate already in H2 of this year going into next year. And we think most of the investment already is behind us, so we are going to see less investment in headcount next year.

Arjun Bhatia: Okay. Understood. Very helpful. Thank you. And then one just on Vibe because it seems like it is getting very good adoption. 60,000 apps, I think, in a short number of months. What are customers building on Monday Vibe? And is that different from what you see them how you have seen them historically use sort of the Monday work management platform?

Roy Mann: Yeah. Hi. It is Roy here. So, Vibe is amazing. Like, we see that customers are really leaning into it. And it is filling up a lot of gaps, and I feel like as a product, 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 would not have imagined. Like, some of them we shared in the investor letter. Fill gaps, build, like, the software of their dreams, and it is all built on top of the monday.com Ltd. infrastructure meaning it is, like, enterprise-grade, the data is saved.

Everything they expect from the platform itself, like, get into Vibe, and some of them are leaning really hard into it.

Arjun Bhatia: Perfect. Thank you so much.

Operator: Your next question comes from the line of Joshua Phillip Baer with Morgan Stanley. Please go ahead.

Joshua Phillip Baer: Great. Thanks for the question. I wanted to ask on the product bundles that you are starting to introduce this quarter in Q4. I guess, first, is there a change on the product from a capabilities or integration perspective? Or is it more about the go-to-market and pricing? And I guess the follow-up is, what is the change here? Is it effective discounts? Like, what is the goal here, and which of the market are you trying to target with this? Thanks.

Casey George: Yeah. Casey George here. I will take this one. So we just launched bundles. We launched three bundles here this last month. So this quarter, we obviously have a lot of visibility in how customers use our products. And what we saw in the market, there were three in particular that stood out where there were pretty consistent use cases with work management and service CRM and work management in and 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 is also ease of use.

Because these are ready-built bundles that they can deploy very quickly and get value from them immediately. And again, we saw in particular industries where these were pretty pervasively used, and therefore, we bundled them up, made them available to the market and our sales team in early days, but we are seeing very good traction with these bundles here in the first quarter since they have been launched.

Joshua Phillip Baer: Okay. Great. Thank you.

Operator: Your next question comes from the line of Brent Thill with Jefferies. Please go ahead.

Brent Thill: Thank you. Just going back to the guidance, I do not think there is a time in our model where you did not raise guidance on the quarter out. So I think many are asking, you know, what is happening? What are the causes for this obviously to your stock premarket and what is happening? So I think a little more explanation is needed to better understand what happened there.

Eliran Glazer: Yeah. Hi, Brent. It is Eliran. So maybe as a reminder, which we keep saying it every quarter, it is important our guidance approach is consistent with prior quarters. It has not changed. And we did not change the philosophy. As we said, in prior quarters, the more measured bit reflects timing effects as we rebalance investments towards ROI areas. So we are investing in performance marketing where we see the return on investment. And due to our big brand capabilities, when we see high returns, we are investing in performance marketing and we see immediate dollars. As we started to shift towards upmarket, 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 is flowing into the next quarters, and it is impacting the numbers that we are seeing this year in terms of revenue and ARR.

Brent Thill: Okay. And, you know, from Casey's approach, I know it is still early in his journey, but I think many are asking how that transition is going. Upmarket, what is still needed to go, what is going well. I think everyone loves to hear his thoughts.

Casey George: Yeah. No. Thank you. It is going exceptionally well. If I point you back to the key metrics that we follow around moving upmarket, the 50, 100k, 250, and 500k. We accelerated on all of those. And why and may ask yourself why is that important? If you understand that the first deal is typically a $50,000 deal, not a million-dollar deal, and it starts at the 50, goes to $250, and then accelerates into hopefully a seven-figure deal. We are seeing that trend continue. I will point to you know, three big wins we had in the quarter, all over a million. All three of those started three or four years ago at probably around 50,000.

And they accelerated over the course of the three, four years. Love to talk about a couple of those opportunities, and particularly, one of them large logistics company in Europe. That is consuming 5,000 seats, 1,500 of those are CRM. We obviously have work management and then there are service fees associated with that win. So here is a large logistics company that is consuming 5,000 seats across three of our products. That was over a million this quarter. We had a large tech company that uses our product across about 10 different departments. Most importantly, they use it to manage all of their M&A.

And that is another company that started with us you know, three, four years ago around 50,000. So all of the metrics that we follow are accelerating and obviously encouraging signs for our ability to move upmarket.

Brent Thill: Great. Thank you.

Operator: Your next question comes from the line of Mark Murphy with JPMorgan. Please go ahead.

Mark Murphy: Thank you very much. The metrics are clearly strong with your larger customers. Can you speak to what you saw in mid-market and below? For instance, how did the down-market business trend versus internal plans? Or is there much of a spread in the growth rate there if we compare it to that over 100k cohort?

Eran Zinman: Yeah. Hi, Mark. This is Eran. I can start. So look, you know, looking at Q3, top-of-funnel trends were choppy overall. We saw some continued volatility in paid search performance. However, the good news is that towards the end of the quarter, we saw encouraging stabilization in new sign-up and top-of-funnel. So overall, I would say going forward, the pipeline remained healthy. A lot of it is based on upmarket, but also the bottom-up mid-market part also looks healthy going forward. So we saw solid growth in large and high-quality opportunities. Both touch and no touch.

And overall, I say we remain confident that all the actions that we have done in terms of top of the funnel, how we rebalance our acquisition channels, and all the investment we have made in the last quarter will pay off going forward.

Mark Murphy: Okay. And as a follow-up, at what point would you think the traffic buildup you are seeing from LLMs? I think refer to that as AIO, and some of the other channels would be able to make up for what you are losing on the Google search side? Is it conceivable to get back to a net neutral position coming out of Q4 or maybe sometime in 2026?

Roy Mann: Yeah. Hi. It is Roy. So what we see is that we are able to shift the budget of our marketing towards like a more sales-led sources and rebalance them and get an ROI. And like Eliran mentioned, these channels take a bit longer to mature, and that is what we see now. We also are getting a lot of traffic from an increasing amount of traffic from AIO, it is too soon to tell if it will fill that gap, but we are already filling it with a different strategy.

Mark Murphy: Thank you.

Operator: Your next question comes from the line of Scott Berg with Needham. Please go ahead.

Scott Berg: Hi, everyone. Thanks for taking my questions here. I think it was Eran earlier had talked about some early traction with some of the AI functionality that your customers are using. Just wanted to see if you had some you know, maybe any specific use cases or maybe internal, you know, corporate departments that you are willing to call out that you are seeing the maybe the most early traction from some of the AI use cases? Thanks.

Casey George: Yeah. Casey George here. It is actually been pretty fascinating. We launched a lot of these offerings at Elevate and I had the opportunity to spend some time with some pretty significant customers at Elevate. And the resounding feedback was this is a very powerful tool. It could solve a lot of problems in our organization. But specifically, we had a large highly regulated insurance company in Europe who needed to solve the reporting issue. Right? And typically, had to acquire some software to go do that at roughly $150,000. That they really did not want to spend. They did not 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 twenty minutes, they built a better tool that they could use that would effectively get far more value out of. And obviously, they did not have to spend $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. They have been trying to solve it for an entire year. They are on the spot. With some help from our team, developed a reporting tool in a matter of less than thirty minutes and effectively solve the problem, as I said, that they have been trying to solve for a year.

So it is a super powerful tool. And as Roy mentioned, it is on a platform or an enterprise platform that is 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 are pretty encouraged with early signs.

Scott Berg: Understood. Helpful. And then maybe a modeling question for Eliran. As you pivot to some of these other channels that you guys started last quarter from a 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 those channels still require, I guess, some overinvestment here in the short term to effectively turn them on? Or would we or do you expect to still see some leverage there given that you are not spending in maybe that Google channel as much? Thank you.

Eliran Glazer: Hey, Scott. Eliran here. So as we have a hybrid model, which is a combination of PLG, the performance market spend 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, overall, when we are thinking about going into the investment, we believe that the share of the performance marketing as a percentage of total S&M is going to decline potentially in total dollar value, it may stay flat or slightly below. But we are going to see the investment mostly in headcount. It is going to be more moderate than what we have seen in the past.

And the momentum, as we said, continues to be very strong. We are expanding within the existing customer base. You can see it with the NDR. So 50k customers, 100k customers, and upmarket motion, ACV is going up, landing is bigger. So this would be an area of investment, but more moderate to what we have seen in the past.

Operator: Your next question comes from the line of Steve Enders with Citi. Please go ahead.

Steve Enders: Okay, great. Thanks for taking the questions this morning. I guess I will just dig a little bit more into just 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 paid Google channel, I guess, hopefully, through October if you have that. And then I guess, you know, secondarily, just how the ramp in the other channels is working and, you know, how that kind of is trending versus your expectations there?

Eran Zinman: Yeah. Hi, Steve. This is Eran again. So look. As I mentioned, we talked briefly about this during the Investor Day. You know, our Google AdWords channel accounts for less than 10% of new revenue. And overall, like I mentioned, we saw some choppiness in Q3, but towards the end of the quarter, saw stabilization. And that is across Google AdWords and across all other channels. We see very healthy double funnel activity. Also, the pipeline looks very healthy. It is growing according to our plans. So look, I think overall, we feel confident going forward. We are with our acquisition strategy. And, also, you know, we also mentioned during the Investor Day the quality over quantity.

We continue to see a trend of this high-quality customers, bigger lands, more expansion, high retention. So overall, we feel confident about the strategy and confident about our ability to continue and acquire new top-of-funnel activity.

Steve Enders: Okay. Alright. Great. That makes sense. And then I guess on the guidance, again, just I understand Q4 is coming down a little bit. I guess, on the back of that, I guess, what maybe gives the confidence as we think through you know, '26 and '27 that you know, you still feel good about that $1.8 billion number especially as we think about lapping some of the price increases going into next year? Just yeah. How should we think through those factors and what gives you all the confidence behind those numbers?

Eliran Glazer: Hey. Hi, everyone. Good question. So when we think about a few reasons why we are confident in next year's numbers. First, demand and expansion from our larger customers. So we are accelerating new year-over-year growth for all upmarket customers. So you have seen 50k, 100k, and 500k, I mentioned earlier. We are accelerating year-over-year growth of RPOs. And we are improving 50k NDR. In addition to that, we have the multiproduct adoption that continues to trend positively. CRM is becoming very significant with more than $100 million in ARR. And we are seeing customers increasingly adopting multiple solutions.

We are only in the early innings of, you know, customers that are adopting more than one product, and only, I think, it was 6% that we said in Investor Day, now we are doing much, much better. AI product engagement is accelerating. We were focused on educating, and we are focused on adoption of customers in the market, and we see a very healthy adoption of AI products, that we believe are going to monetize next year in a more significant way. And as Eliran mentioned, we have signs of stabilization in top of funnel at the end of the quarter that we are encouraged by that going into the fourth quarter and into next year.

Steve Enders: Okay. Perfect. Thanks for taking the questions.

Operator: Your next question comes from the line of Alex Zukin with Wolfe Research. Please go ahead.

Alex Zukin: Hey, guys. Maybe just since we are bundling kind of all the new products into one category, now maybe what is the latest on Monday CRM service products in terms of traction in the quarter? How much they are contributing to net new ARR today? Then I have got a quick follow-up question on the model.

Casey George: Yes. Casey, I will take this one. So CRM, as we just mentioned, eclipsed $100 million this year in a very short amount of time, I think less than two years. We continue to see traction of course across SMB and mid-market in particular. With service, this has really been a great story for us. It is only nine months in, but we continue to see even more significant contribution coming from service. I believe our size of service customers is, you know, two times those that of other products. The service continues to accelerate, nine months in, we do not have a year-to-year compare. But we are very bullish on both of those products going into next year.

Alex Zukin: Got it. And then maybe Eliran, just for you, if you have had a couple of questions regarding, how you feel maybe about next year specifically. I think it is just given some of the changing dynamics that you are mentioning around channels and how you are going to market and shifting spend. What seemingly is a little bit of a change 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 is for next year?

Is it something where it may be a little bit more back-end loaded, and you could actually see acceleration in '27 because of some of these timing adjustments that you are calling out, I think it would be really helpful for us to just understand the pacing of growth given some of these evolving dynamics.

Eliran Glazer: Hey, Alex. Eliran here. So I think I mentioned it earlier about if you think about where we are going to be in fiscal year 2027, 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. And, you know, this is something that when we made the assumptions, we took into account the trends that we see today.

We made some assumptions about the cross-sell motion, the new product that we are launching to the market, the fact that AI is going to be monetized to a certain extent, and the fact that we are going to expand within the existing customer base. So having all of this into taking all of this into account, we feel that the $1.8 billion in fiscal year 2027 is achievable. In the interim, we are confident with the consensus number for next year as well.

Alex Zukin: Perfect. Thank you, guys.

Operator: Your next question comes from the line of D. J. Hynes with Canaccord. Please go ahead.

D. J. Hynes: Hey, good morning, guys. Eliran, the new AI pricing model and the introduction of Agent Factory feel like it gives you more or less visibility into the model? I am just trying to think about how these changes may impact the ability to forecast the businesses. If AI becomes a more, you know, meaningful driver going forward?

Eliran Glazer: Hey. It is Eliran. So, you know, with regards to visibility, early days. As I said earlier, we are focused on education and adoption within our customer base. It gives us confidence that we see that there is a strong momentum. However, it is not something that is going to be very meaningful in the time in terms of revenue next year. So we take it into account, but it is not very meaningful.

D. J. Hynes: Okay. And maybe I can go back to Jackson's question. I mean, obviously, we saw the acceleration in the RPO metrics that you are sharing. Are you seeing changes in contract duration as you go further upmarket? Is that a tailwind to that RPO metric?

Casey George: Yes. This is Casey. For sure. Obviously, as you move upmarket, we would like longer-term contracts and obviously our customers would as well. So we are seeing an acceleration on the term length for our contracts as we move upmarket.

Eliran Glazer: Yeah. Maybe I will just go to Yeah. Just to add to, Casey, kind of, what we see is basically the percentage of ARR in terms of contract duration. So multiyear is becoming more meaningful in terms of the numbers coming from, you know, 5%, five years ago to now around 13%. We see the annual contracts are going from 65% to 70%. So altogether, when you combine the annual plus the multiproduct, you are getting more than 80% of ARR coming from annual plus multiproduct. And this is something that the trend continues.

D. J. Hynes: Okay. Got it. Thank you.

Operator: Your next question comes from the line of Raimo Lenschow with Barclays. Please go ahead.

Raimo Lenschow: Perfect. Thank you. Can I stay on RPO? Like, if I look at the old deck 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?

Eliran Glazer: Yeah. Sure. It is Eliran. So when we presented the numbers in the Investor Day was during mid-August. And the RPO is a new metric for us. And upon further review, post-Investor Day, we made some adjustments to ensure consistency and accuracy across periods. This was part of our auditor's review of Q3, and they signed off the RPO data presented in our Q3 earnings. And we are confident that these metrics, as I said earlier to Jackson's question, provide a clear and reliable view in terms of our contracted revenue base and future growth visibility going into next year.

Raimo Lenschow: Okay. Perfect. Okay. So then we should be clean on RPO going here or it is just a change on accounting, basically.

Eliran Glazer: Yes. Correct.

Raimo Lenschow: Okay. Perfect. Okay. That is all I have. Thank you.

Operator: Your next question comes from the line of Derrick Wood with T. V. Cowen. Please go ahead.

Derrick Wood: Great. Thanks. So you mentioned that, March motions carry longer sales cycles. But you did see really strong growth in upmarket KPIs, new customers accelerating, RPO accelerating. So are you seeing upmarket 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 is setting up? And anything to share with how the quarter is tracking to date?

Casey George: We do continue to see an acceleration in our pipeline as we move upmarket. As it relates to the quarter, all I would say is that you know, when you move upmarket, obviously, you create somewhat of a hockey stick in the quarter. And in the year. As we progress upmarket, we continue to see that phenomenon play out. But we are very encouraged with the pipeline that we have built upmarket. And again, we have not really even started with the cross-sell motion. So we are bullish that will only add additional pipeline to the year.

Derrick Wood: Got it. Thanks. And on the AI side, I mean, when you look at Magic, Vibe sidekick, agent builder, 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?

Casey George: So Vibe is definitely taken off. That is that there has been a resounding excitement around that offering. Obviously, we just announced it, but I had the opportunity, as I mentioned, spent some time with thousands of customers at Elevate. There was a ton of excitement around that. As I mentioned a couple of use cases, there is a dozen more that I could speak to where customers are literally using it that day and getting value from it. So we are obviously, as I mentioned, very early on, but we are super excited about the prospects of Vibe most particularly because we are in the market to absorb that. So we are the, you know, work management company.

We are 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 offerings do absolutely that, whether it is our agents or Vibes. So, again, pretty excited where we are. Looking forward to next year and seeing how that develops as we go.

Eran Zinman: Maybe just to add to what Casey mentioned, this is Eran. So I 100% agree. Vibe right now presents the best opportunity for monetization. And we see the most momentum with it. I would say in addition to that, we feel that monday agents can also unlock new go-to-market, a new type of customer that we did not have before. So we are clearly excited about this one both for our existing base, but also for our ability to tap into new types of customer audiences.

Derrick Wood: Great. Thank you.

Operator: Next question comes from the line of Rob Oliver with Baird. Please go ahead.

Rob Oliver: My question is for Casey. So Casey, obviously, a lot of changes going on your side. 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 upmarket, but it does sound like that comment is a bit of a change from when you were on stage a few months ago. So just wanted to understand putting aside the obvious change in sales cycles as you move upmarket, is clearly having success, kind of what changed in the market? And then I had a quick follow-up.

Casey George: I do not think there has really been a whole lot of change. What I would say is we have to do two things at once and we are. We still have our high-velocity business in SMB. That continues to pace at a healthy rate. And then we layered in the upmarket motion, which I am stating the obvious, which those sales cycles typically a little bit longer. But, again, we have to do two things at once, and we are. So still very encouraged. My strategy has not changed, and it is consistent with what I mentioned at Investor Day.

Rob Oliver: Got it. Helpful. And then, as you think about that move upmarket, obviously, you guys have a very powerful partner network in the low to mid-range. And, you know, I know you are thinking a lot about partners moving upmarket as well. Is there a way for us to think about how partner contribution may play a role, and perhaps as a percentage of new business or how you are thinking about those partner relationships and also ownership of those accounts terms of internal versus a partner basis? Thanks.

Casey George: Yeah. The ecosystem has always been very strategic to us and will continue to be. We continue to grow our partner ecosystem almost daily. Especially as it relates to some of our new offerings. We have new partners coming on board that want to take advantage of our CRM offering, our service offerings, and obviously now our AI offering. So it is not just about the existing ecosystem we have today. It is 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 you look at some of the emerging markets in 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 am super excited about where we are with the ecosystem. Even more excited about where it is going.

Rob Oliver: Helpful. Alright. Great. Thank you.

Operator: Your next question comes from the line of Tom Blakey with Cantor. Please go ahead.

Tom Blakey: Hey, thanks for taking my questions here. Just two for me. On the sales cycles and the move upmarket, I am thinking of you guys any that is necessarily new. You have been very articulate in terms of laying that out even before Analyst Day. Just wondering if anything maybe kind of like downtick in terms of expectations there in the most recent couple of months. Things are just maybe taking a little longer. The deals getting more complicated as they become more penetrated, you know, a victim of success, so to speak.

And then secondly, clicking on the SMB, you are doing so well in these metrics that you are talking about with regard to NRR and RPO at the high end. And the decel that is kind of implied into this $1.8 billion estimate for calendar 2027, has anything changed in terms of know you have been asked a couple of times on the call, but gross churn on the SMB side near term? And what are your expectations? You did a good job articulating what the calendar '27 estimates are, kind of a bridge there. What are you expecting in terms of SMB with regard to that $1.8 billion so near term and long term on SMB? Yes.

Thank you so much.

Casey George: So this is Casey. I will answer the first part and I will hand it to Eliran. So if you understand when we talk about moving upmarket, it does not necessarily mean we are talking about the Fortune 100. Right? We are moving up through mid-market. And quite honestly, the larger accounts are coming to us. So as it relates to some of the sales cycle, this is just the natural sales cycles we see as we move upmarket. That has not changed. That is consistent. We plan for that and that has played out in a very healthy way in the numbers. Right? On the SMB side, that has been a very consistent business for us.

It continues to be. We see acceleration especially with the opportunity to sell a full platform. Because we can sell, you know, the full platform into that customer set, including our AI offerings. So really no change. I would not highlight any concern whatsoever. It is playing out exactly as I expected. In some instances, it is actually playing out better. But I will hand it to Eliran for some of the guidance on the SMB.

Eliran Glazer: Yeah. Tom, hi, it is Eliran. 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 upmarket, 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 better. With regard to your question about sales cycle, I just want to give kind of, more of a macro overview. I think that, you know, over the past few quarters, not only for monday.com Ltd., but in general, there is some choppiness in the market. It is uncertainties.

And therefore, customers, with regards to all businesses, are making probably decisions. It takes them longer. With everything that is going on. And I would say it is more from a macro deal, a macro thing, but we are seeing positive momentum as part of our, you know, experience with Casey.

Tom Blakey: Thank you. Thank you. Very helpful.

Operator: Your next question comes from the line of Matthew Bullock with Bank of America. Please go ahead.

Matthew Bullock: Alright. Great. Appreciate you taking the question. I wanted to ask about sales force productivity. Obviously, you are adding, you know, quite a few quota-carrying reps on the managed sales side. Is sales productivity tracking in line with expectations? Maybe remind us how long it takes a typical, you know, enterprise or upmarket sales rep to ramp? And then should we start to see more of those benefits in '26 as we get more maturity at Salesforce?

Casey George: Yeah. We are seeing productivity move in the right direction, a very healthy direction. I would tell you, this is the part I am most excited about. Right? If you think about all the offerings we have available to the market, we are going to be our best reference. And when I say that, we are using the technology that we are taking to market to effectively make our sellers more productive. So we have our AI agents. We have our customer success agent, customer success AI agents. We have a number of internal processes that we are leveraging AI. So it is not just about us going to market with these offerings.

It is about making our sellers more productive, and AI is playing a huge role in that. So our productivity continues to improve. I do expect an even greater improvement next year because of some of the changes we are making with our AI agents.

Matthew Bullock: Fantastic. And then one quick follow-up if I could. It sounds like maybe the embedded contribution for 2026 from AI products is expected to be a little bit more measured, but maybe if you could, you know, help us think about what is embedded in terms of the assumptions for the 2027 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 core versus the multiproducts? That would be helpful. Thank you.

Eliran Glazer: Hi. It is Eliran. So as I mentioned earlier, there are not going to be any new products, other than the AI product that we introduced to the market. 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 one product. So the cross-sell motion is going to be very strong between, for example, service and work management. CRM will continue to be strong with the Monday campaign that we introduced just recently. We are expecting some revenue from AI products, but as you said, it is going to be more moderate.

But the impact of that can be on the retention of our existing customer base. It is not directly revenue, but the fact that our gross retention is better, the fact that we have more stickiness on the platform, is generating more revenue opportunities that are going to impact other products as well. So taking all of this into account, you know, provides us with the confidence in going into $1.8 billion in fiscal year 2027.

Operator: Thank you. Your last question comes from the line of Taylor McGinnis with UBS. Please go ahead.

Taylor McGinnis: Yeah. Hi. Thanks so much for taking my questions. Maybe just the first one, I know you guys have gotten, you know, the question in a number of ways, but just to be a little bit clearer. So if it is my understanding, it sounds like the success that you guys are seeing upmarket maybe is not just yet to offset some of the choppiness or softness downmarket. And so maybe that is what led to the 4Q guidance cut. So can you just talk through and give a little bit more clarity on like what got tougher? Is it that you thought upmarket would have been growing fast to offset the slower growth downmarket?

Or did something within SMB and downmarket get softer than before?

Eran Zinman: Hi, Taylor. This is Eran. So I do not think it is a matter of something that got harder in terms of acquisition. It is just a shift in the type of customer that we acquired during this quarter. So as we said, we have pivoted some of the budget to different channels, we saw those bringing great pipeline. Just this pipeline takes a little bit longer to convert. So it is not that one is at the expense of the other. It is just a different type of customer, but overall, this serves our strategy. Going upmarket, higher quality of customers, and if anything, just accelerate the motion that we already started.

Taylor McGinnis: Perfect. Thanks. And then just my last one is Eliran, you talked earlier about comfort in the street numbers for next year. Just curious, like, in order to hit those numbers, do we need to start to see, like, 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 when it sounds like there is still choppiness in some trends out there, is that something that is embedded in the Outlook for next year? Or maybe you could just speak to, you know, your comfort in the assumptions and how we think about that number going forward. Thanks.

Eliran Glazer: Hey, Taylor. So with regards to numbers for next year, as I said, we are going to present them in our next earnings release in February. We are going to provide you full visibility and transparency with regard to the assumptions that we are taking into account. I did say that we have some confidence in next year's numbers as a fact of everything that all the trends that we are seeing now, the momentum that we are seeing upmarket, as well as the fact that we are starting to see stabilization in our downmarket top-of-funnel activity. These are the things that make us feel comfortable about the consensus for next year.

Roy Mann: And, hi. It is Roy. I can add that, like, work management is our leading product, and we see that we are succeeding with our upmarket strategy mainly through work management. It is like we are leading that market, and we see, like, great potential going forward and growing with it as well.

Taylor McGinnis: Thank you so much.

Operator: There are no further questions at this time. Ladies and gentlemen, this concludes today's call. Thank you all for joining, and you may now disconnect.