Damon Kogan — Analyst, Barclays
Hey, guys. This is Damon Kogan on for 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. 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.
Eliran Glazer — CFO, monday.com
Hi, Raimo, 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 or 50K customers cohort has, you know, has 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, they increased our NDR by 1% or 2%. We're going to lap this at the end of Q2. We don't believe that expansion or new adoption will now be enough to offset some of the pricing grow over that we have seen in the past.
Damon Kogan — Analyst, Barclays
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.
Eran Zinman — Co-Founder and Co-CEO, monday.com
This is Eran. Look, we have nothing new to report with paid search. Overall, the top-of-funnel environment remains soft, 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.
Josh Baer — Analyst, Morgan Stanley
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, can you just provide a little more context on how exactly that works? Also wondering, what are the impacts in 2026 from the new model?
Eran Zinman — Co-Founder and Co-CEO, monday.com
Hi, Josh, this is Eran. Maybe I can start and then hand it over to Casey. 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 being 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.
For existing products, it's gonna be gradual. I'll let Casey kinda cover the change we're gonna do with existing ones.
Casey George — CRO, monday.com
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 wanna consume value in our platform. As you heard from Eran with our new customers, it is, it comes with, you know, seats plus credits. For existing customers, it's gonna be an opt-in motion, we'll work with them over the next, you know, two 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.
Josh Baer — Analyst, Morgan Stanley
Got it. Thank you. For as far as 2026, are there any assumptions on the impact 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.
Eliran Glazer — CFO, monday.com
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 consume any significant impact or any impact on the numbers.
Jackson Ader — Analyst, KeyBanc Capital Markets
Great. Thanks for taking our questions, guys. I guess if I can just quickly follow up on the, 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 kinda 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.
Casey George — CRO, monday.com
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.
Jackson Ader — Analyst, KeyBanc Capital Markets
Great. Okay, thanks, Casey. Actually, I'll stick with you. The larger lands, you know, from the direct sales motion with larger, you know, trying to land a little bit more upmarket. 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.
Casey George — CRO, monday.com
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 were anticipated. 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 upmarket, 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.
Jackson Ader — Analyst, KeyBanc Capital Markets
Great. Okay, thank you.
Mark Murphy — Analyst, JPMorgan
Oh, 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, can you share what you are observing within the customer base in the last several months as Claude Code and Claude Cowork have 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.
Roy Mann — Co-Founder and Co-CEO, monday.com
Hi, it's Roy. 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, and 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 perfectly aligned, and it's great to see adoption of AI.
Eran Zinman — Co-Founder and Co-CEO, monday.com
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 workflow.
Mark Murphy — Analyst, JPMorgan
Okay. As a quick follow-up, the stat that shows 10% of the new ARR in Q1 was driven by AI, it's pretty impressive. Could 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 in AI workflows? Is it the AI credit pack? 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?
Eran Zinman — Co-Founder and Co-CEO, monday.com
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 agents product because it was just released about a 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.
Mark Murphy — Analyst, JPMorgan
Thank you.
Howard Ma — Analyst, Guggenheim Securities
Hey, thanks. I wanna add my congratulations on a strong quarter as well. I wanna 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-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 One AI fit into pricing? Will it be a separate add-on?
Eran Zinman — Co-Founder and Co-CEO, monday.com
Hi, this is Eran. Look, as I said, we opening up the ability to purchase agents for new customers. We feel the adoption for existing ones are gonna 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 One AI 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.
In terms of the commercial fit, we're still working through the precise packaging and pricing, but 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.
Howard Ma — Analyst, Guggenheim Securities
Okay. Got it. Thank you, Eran. As a follow-up for Eliran, I want to ask about the, 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.
Eliran Glazer — CFO, monday.com
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.
Howard Ma — Analyst, Guggenheim Securities
Okay. Thank you.
Steve Enders — Analyst, Citi
Okay, great. Thanks for taking the questions here. Maybe just follow it up on some of the guide philosophy, I think, you know, try to understand a little bit better just the upside that you saw this quarter. I guess, A, like, what was the kind of key factors that drove the revenue upside? Then I guess, B, kind of moving forward, how should we think about, you know, I guess what's kind of assumed there? Maybe what's different in the guide philosophy versus what we saw in 1Q?
Eliran Glazer — CFO, monday.com
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 heads of 500K, 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.
Steve Enders — Analyst, Citi
Okay. Okay, that makes sense. Then on, I guess I wanna follow up on some of the agents discussion and 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, you know, using monday.com homegrown agents versus where it makes sense for third-party agents to be utilized instead.
Roy Mann — Co-Founder and Co-CEO, monday.com
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, 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.
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.
Steve Enders — Analyst, Citi
Okay. Perfect. Good to, good to hear and, thanks for taking the questions.
Speaker — Analyst, Jefferies
Hi. Thank you. This is [John B.] on 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? 2nd 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 a little depressing lapping the factor.
Casey George — CRO, monday.com
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 want to 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.
Eliran Glazer — CFO, monday.com
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. 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.
We expect, and 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 — Analyst, Jefferies
Thank you.
DJ Hynes — Analyst, Canaccord
Hey, thank you guys, and congrats on the 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?
Eliran Glazer — CFO, monday.com
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%, but 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're not seeing yet a significant impact on our gross margin, but we believe there is going to be additional cost regarding computing costs related to AI.
DJ Hynes — Analyst, Canaccord
Okay. Then Eran, 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?
Eran Zinman — Co-Founder and Co-CEO, monday.com
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. 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.com really can help customers adopt agents and also voice agents in a very easy and intuitive way.
DJ Hynes — Analyst, Canaccord
Yeah. Okay. Thank you.
Alex Zukin — Analyst, Wolfe Research
Hey, guys. Thanks for taking the question. Maybe the first one on new product ARR, it was north of 11%. It continues to grow nicely, 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.
Eran Zinman — Co-Founder and Co-CEO, monday.com
Yeah. Hi, this is Eran. I'll just give a kinda high-level number. As we said, new products accounts for over 11% of our ARR. We see significant opportunity to accelerate across sell penetration, especially mid-market segment. We see more and more customers adopting more than two products and even more. CRM, as we said, we surpassed $100 million. We continue to grow very nicely, mostly in the SMP 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 mid-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.
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, and, very happy with the adoption so far.
Alex Zukin — Analyst, Wolfe Research
Okay, perfect. Then maybe just a second one. The comment on maybe why the $50,000 and $100,000 K 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?
Eliran Glazer — CFO, monday.com
Yeah. 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, so 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 add at historical highs. We look at them all together, and this is what kind of the way we view it.
Alex Zukin — Analyst, Wolfe Research
Great. Thank you, guys.
Taylor McGinnis — Analyst, UBS
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 2Q 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?
Eliran Glazer — CFO, monday.com
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, so it was very small.
Taylor McGinnis — Analyst, UBS
Great. Thank you so much.
Allan Verkhovski — Analyst, BTIG
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? Then I've got a quick follow-up.
Eran Zinman — Co-Founder and Co-CEO, monday.com
Yeah. Hi, this is Eran. We see some usage through the MCP protocol. 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. 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.
Allan Verkhovski — Analyst, BTIG
Got it. Maybe just as a follow-up to an earlier one about your guidance. The Q2 revenue guide implies lower sequential growth than 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 there?
Eliran Glazer — CFO, monday.com
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 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. 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.
When we take all of this together into account, our guidance does imply some moderation in H2.
Allan Verkhovski — Analyst, BTIG
Perfect. Thanks, guys.
Matt Bullock — Analyst, Bank of America
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 the first quarter. 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.
Eran Zinman — Co-Founder and Co-CEO, monday.com
Yeah. Hi, Matt. This is Eran. Look, as I said, all the AI revenue that we got this quarter was not from AI agents and consumption. Mostly driven by Vibe and AI Blocks and 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 kinda model it out right now.
Matt Bullock — Analyst, Bank of America
Understood. 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?
Casey George — CRO, monday.com
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. Again, we're gonna make it highly incentivized for them to do that.
Eliran Glazer — CFO, monday.com
Yeah. Just to add to that is, it's not a migration. It's like a flip the switch kinda thing. There is nothing they really need to do other than agree to it. There's no sort of migrating anything.
Matt Bullock — Analyst, Bank of America
Understood. Thank you.