What Management Said

Read the full Q1 2026 transcript ↗

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. 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. 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. 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. Since 2025, AI has driven a 32% increase in our output per developer and a 38% reduction in product time to market. 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 give AI the context to drive real outcomes.

As AI agents takes on more work across organizations, revenue expands naturally without requiring additional seats purchases. 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. With that, I'll turn it over to Eliran to cover our financial and guidance. Today, I'll review our first quarter fiscal year 2026 results in detail and provide updated fiscal year 2026 guidance.

What went well
  • Q1 fiscal 2026 revenue grew 24% year-over-year to $351 million, reflecting sustained demand as enterprises consolidate their work infrastructure onto the platform.
  • monday.com generated a record $49 million in operating profit, up from $40.8 million in the year-ago quarter.
  • Adjusted free cash flow was $102.8 million and adjusted free cash flow margin expanded to 29%.
  • Gross retention continued to improve and reached historical highs for the company.
  • Customers with over $50,000 in ARR now represent 42% of total ARR, and the company delivered a record number of new customers with over $500,000 in ARR.
  • Approximately 10% of net new ARR in Q1 was driven by AI products such as Vibe, AI Blocks, and Sidekick, even before the newly released agents product contributed.
  • AI is delivering internal gains, driving a 32% increase in output per developer and a 38% reduction in product time to market since 2025.
  • 34% of the $50,000-plus ARR cohort has adopted more than one product, up from 29% in Q4.
  • New products now account for over 11% of ARR, and monday CRM surpassed $100 million in ARR.
  • Average contract value grew 22% year-over-year, with double-digit seat growth in both mid-market and enterprise segments.
  • March was described as one of the strongest months the company has ever had, and pipeline remained very strong.
  • The company launched the monday AI Work Platform and mondaydb 3.0, delivering a 100x increase in scale from 100,000 items per board to over 10 million.
What went wrong
  • The top-of-funnel environment remained soft, particularly in paid search, in line with expectations set at the start of the year.
  • Overall NDR was 110% in Q1 and management now expects it to slightly decline by the end of fiscal year 2026.
  • Management expects 1% to 2% of temporary pressure on upmarket NDR metrics for the remainder of fiscal 2026 as it laps prior pricing benefit.
  • The 100K customer NDR is running slightly below the 50K cohort NDR because larger customers land bigger on multi-year deals rather than expanding over time.
  • Operating margin absorbed an approximately 190 basis points negative FX impact, mainly from appreciation of the Israeli shekel against the US dollar.
  • Net income declined to $56 million from $58.4 million in the year-ago quarter, and gross margin declined to 89% from 90%.
  • The accelerated share buyback executed during Q1 is expected to reduce full-year 2026 adjusted free cash flow by approximately $20 million.
  • Full-year guidance implies some moderation in the second half, reflecting expected increases in AI compute costs and uncertainty in how AI revenue ramps.

Guidance Changes

MetricPeriodCurrent guidance
RevenueQ2 FY2026$354 million-$356 million, up 18%-19% year-over-year
Non-GAAP operating incomeQ2 FY2026$46 million-$48 million, operating margin 13%-14%
RevenueFY2026$1.466 billion-$1.474 billion, up 19%-20%
Non-GAAP operating incomeFY2026$185 million-$191 million, margin approximately 13%
Adjusted free cash flowFY2026$280 million-$290 million, margin 19%-20%
Overall NDRFY2026Expected to slightly decline by end of year
Employee headcountFY2026Expected to stay largely flat for the remainder of the year
Gross marginMedium termExpected in the mid-80s due to AI compute costs, versus prior 90%

Performance Breakdown

MetricYoYNote
Revenue +24% to $351 million Sustained platform demand and enterprise consolidation of work infrastructure, with broad-based outperformance across segments and regions plus AI contribution.
Operating income Up to a record $49 million from $40.8 million Increasingly efficient growth, though partially offset by roughly 190 basis points of negative FX from shekel appreciation.
Net income Down to $56 million from $58.4 million Reported without a specific driver cited on the call.
Gross margin 89% versus 90% Modest decline as AI compute costs begin to weigh on margin.
Adjusted free cash flow margin 29% Underscores the financial durability of the business model.
ACV +22% Larger lands and expansion as the company moves upmarket in mid-market and enterprise.

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
AI Work Platform repositioningmonday Work Management platform that helps teams manage workmonday AI Work Platform re-architected so work is orchestrated between humans and AI agents from a single system of record—
Pricing modelSeat-based pricingNew seats plus credits consumption-based pricing for new customers, with existing customers able to opt in gradually over about two years—
AI contribution to ARREarly AI adoption via Vibe, AI Blocks, SidekickApproximately 10% of net new ARR driven by AI, expected to grow as the newly released agents product matures—
M&AOrganic focus with potential inorganic opportunitiesAgreement to acquire One AI to bring native voice agent capabilities into the AI Work Platform and CRM—
Upmarket momentumBuilding enterprise traction42% of ARR from $50K-plus customers and a record number of $500K-plus new customers—
Capital returnOpportunistic buyback$553 million of shares repurchased in Q1, with about $182 million remaining under authorization—

Q&A Summary

Can you explain the updated NDR guidance given the stabilization seen across the business?
There is a lot to be positive on in retention and expansion, with gross retention at historical highs and double-digit seat growth in mid-market and enterprise; 34% of the 50K cohort has adopted more than one product versus 29% in Q4. However, the company is lapping 2024 pricing actions that had added 1-2 points to NDR, which will be lapped at the end of Q2, and expansion is not expected to fully offset that pricing grow-over.
What is the update on top-of-funnel demand versus the end of 2025?
Nothing new to report on paid search; the top-of-funnel environment remains soft, in line with expectations given at the start of the year. ACV of new lands is increasing across touch and no-touch, high-quality leads continue to come in, and performance marketing is managed cautiously.
How does the new seats plus credits pricing model work and what is the 2026 impact?
New customers have two expansion vectors: seats as before, plus AI credits that scale with consumption of agents and functionality. For existing customers it is an opt-in motion phased over about two years with incentives. It is still early stage and no significant impact was assumed in the 2026 numbers.
Are you seeing slowing seat growth at existing customers, or is the pricing change anticipatory?
There has been no degradation in demand for seats; demand continues to be strong with acceleration in some emerging markets, and up-market seat demand is very solid as customers take on new workloads leveraging AI.
What are customer conversations like as Claude Code and Claude Cowork have proliferated?
Many customers have purchased Claude; monday.com's vision is agents and people working together on the same platform, including external agents which can sign up for their own seats. There is a big difference between people using such tools on their own versus using native agents integrated into collaborative work, which is where monday.com believes it shines.
How are you deriving the stat that 10% of new ARR was driven by AI?
It refers to direct AI contribution, not revenue merely made possible by AI. It currently excludes the agents product, which was released about a week earlier, and is driven by existing offerings including Vibe, AI Blocks, and Sidekick.
How much of your base will be on the new seats plus usage model heading into 2027, and where does One AI fit?
Adoption among existing customers is expected to be very gradual and hard to estimate; new customers will buy both seats and AI credits. One AI brings strong voice agent expertise and will be integrated deeply into the AI Work Platform and CRM, becoming part of the AI credit consumption model.
Does adding usage-based elements better match revenue with AI costs for gross margin preservation?
Gross margin is expected to be in the mid-80s versus the prior 90% because of AI computing costs; no significant impact has been seen yet, but additional compute cost is anticipated.
What drove the revenue upside and how does guidance philosophy compare to Q1?
Nothing changed in philosophy; the outperformance was broad-based across segments and regions, with continued up-market momentum, record 500K net adds, and roughly 10% of net new ARR from AI.
Why does the Q2 revenue guide imply lower sequential growth than Q1 despite being seasonally stronger?
Guidance reflects everything known today, with focus on managing full-year expectations rather than a single quarter; AI compute expenses are expected to increase through the year and there is inherent uncertainty in how AI revenue ramps, so the guide implies some moderation in the second half.
How should we think about the in-quarter NDR and the lower 100K net adds?
Recent enterprise deals are landing bigger on multi-year agreements, so the 100K NDR is slightly below the 50K cohort; this is due to land dynamics rather than churn, as gross retention is at all-time highs. Management expects 1-2 points of temporary upmarket NDR pressure for the rest of fiscal 2026.

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Q1 2026 call
Reported 2026-05-11 · figures from the monday.com Ltd. Q1 2026 earnings call.

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