monday.com Ltd. Q2 FY2025 earnings call

• Robust revenue growth of 27% in Q2. - Q2 non-GAAP operating margin of 15%. - Customer adoption of AI capabilities accelerated with users performing 46 million AI-driven actions since launch. - Introduced monday magic, monday vibe, and monday sidekick AI-powered capabilities. - Enterprise segment is fastest-growing with record net new adds of high-paying customers. - monday CRM reached $100 million in annual recurring revenue. - Appointed Harris Beber as CMO and Adi Dar as Chief Customer Officer. - Head count increased by 172 employees to 2,867 in Q2 and expects to grow by approximately 30% in fiscal year '25.

Total revenue was $299 million, up 27% from the year ago quarter. Second quarter gross margin was 90%. Research and development expense was $59.2 million in Q2 or 20% of revenue, up from 16% in the year-ago quarter. Sales and marketing expense was $139.2 million in Q2 or 47% of revenue, compared to 51% in the year-ago quarter. Net income was $58.3 million in Q2 2025, up from $49.3 million in Q2 2024. The enterprise segment is the fastest-growing, with a record number of net new adds of customers paying over $100,000 annually and monday CRM reaching $100 million in annual recurring revenue.

• For Q3 FY25, revenue expected to be $311 million to $313 million (24%-25% growth YOY), non-GAAP operating income $34 million to $36 million, operating margin 11%-12%. - For full year FY25, revenue expected $1.224 billion to $1.229 billion (26% growth YOY), non-GAAP operating income $154 million to $158 million, operating margin ~13%, adjusted free cash flow $320 million to $326 million, adjusted free cash flow margin 26%-27%. - Overall NDR expected to be stable at 111% throughout FY25.

• Impact from Google algorithm changes affecting lower end of the market, though temporary and actions being taken to address. - Uncertainties related to forward-looking statements and factors that could cause actual results to differ from expectations.

Q: Nice results. But I'm wondering about pivoting to enterprise, NDR and the enterprise picking up, growth rate in the second half, new products and executive adds.

A: Eran Zinman said new executives like CRO, CMO, CCO will contribute to upmarket momentum, retention, and expansion. Multiprod strategy helps bundle products, and upmarket expansion efforts are separate but contributing to growth.

Q: Talk about demand environment, spending environment, linearity in the quarter, large deals.

A: Roy Mann said demand strong in CRM, shifts to mobile, some pressure from Google but small. Eliran Glazer added demand strong upmarket, record net adds for 100k customers, some softness in down market due to Google but temporary and actions taken.

Q: Sales hiring and productivity, CRM accounts net new number.

A: Eran Zinman said sales hiring ramped up in first half, in line with plans, will continue to hire. Jackson Edmund Ader asked about CRM net new number being low, Eran Zinman said part seasonality, part low end market pressure, and strategy to land bigger customers.

Q: Double-click into CRM business, how it resonates, net new logos vs cross-sell.

A: Roy Mann said CRM offers flexibility, huge demand, started with SMB-style audience, moving upmarket with more capabilities.

Q: AI capabilities, vibe coding, foundational models, differentiation.

A: Roy Mann said excited about vibe coding, monday has open platform, modular, gives head start in building enterprise-grade apps integrated with workflow.

Q: Google changes impact on customer acquisition cost, how long to remedy.

A: Roy Mann said not huge impact on performance marketing, can optimize. Eliran Glazer said impact baked into guidance, actions taken to reallocate resources.

Q: AI capabilities transition from work management to work execution, how customers use, value.

A: Roy Mann said AI capabilities like magic, vibe, sidekick help create AI to accomplish work, not just manage, with examples of helping with event venue.

Q: Yield on investments beyond this year, higher growth or operating leverage.

A: Eran Zinman said hiring for sales organization will grow into '26 at lower percentage, R&D investment showing fruits, '26 to be different with more efficiency and results of '25 investment.

Q: Managed services adoption in enterprise accounts, add-on services.

A: Eran Zinman said offer add-on services like security, governance as part of enterprise package, growth in line with enterprise segment growth.

Q: Fiscal year 2025 guidance, pricing contribution, FX impact.

A: Eliran Glazer said no change to prior, FX impact below 50 basis points, pricing impact $40 million this year.

Q: Go-to-market changes, change from COO to CCO.

A: Eran Zinman said new CRO driving impact, Chief Customer Organization established to support enterprise accounts, improve retention and expansion, seeing positive results.

Q: Google commentary impact, efficacy of changes.

A: Roy Mann said impact not significant, can optimize budget allocation. Eran Zinman said have other channels, monitor campaigns, optimize to remain efficient.

Q: Services compared to CRM rollout, Google impact on forward guide.

A: Eran Zinman said services scaling fast, different go-to-market, Google impact on lower end business, guidance reflects execution and uncertainty addressed. Roy Mann said excited about service, different go-to-market.

Q: AI actions trended, potential monetization story in 2026.

A: Eran Zinman said AI action adoption growing, started payment in year, seeing more revenue from AI actions, new AI features contributing. Roy Mann said driving more usage with value, expecting increase in AI monetization.

Q: SEO question, conversion rates, traffic, performance marketing costs.

A: Eran Zinman said optimization done, effects minor on mid-market and enterprise, insignificant on SMB.

Q: Head count growth, moderation in hiring pace.

A: Eliran Glazer said head count growth ~30% in FY25, decelerate in H2, expect moderation to capture opportunities.

Q: CRM ARR, seat growth, pricing, stock-based comp jump.

A: Eran Zinman said ACV growing in CRM, seat expansion, larger customers. Eliran Glazer said stock-based comp jump seasonality related to equity refresh and strategic hiring.

Q: SEO impact on downmarket customer base, cash, strategic priorities.

A: Eran Zinman said gross retention at all-time high, no change in churn. Eliran Glazer said priority organic growth, consider M&A, focus on product and sales.

Q: Enterprise multi-thousand seat opportunities, AI monetization.

A: Eran Zinman said focused on larger enterprises, have opportunity on both mid-market and enterprise. Roy Mann said AI consumption-related revenue sets stage for bigger monetization next year with increased usage and value.

Q: Magic, vibe, sidekick as AI functionality, performance marketing in back half.

A: Roy Mann said magic, vibe, sidekick are new AI functionality, Eliran Glazer said apply same philosophy on guidance, consider opportunities and investment if appropriate.

Q: Partner network role, verticals/geographies outperforming.

A: Eran Zinman said no particular segments overperforming or underperforming, continue performance marketing in H2 across all products.

Q: Revenue guide, assumptions changed, next year lapping price increases.

A: Eliran Glazer said operating in accordance with playbook, taking into account NDR, Google Search, head count, hiring, new products, responsible and prudent guidance. Eliran Glazer said NDR broad-based, strength in mid-market and upmarket, deceleration from 112% to 111% due to lapping 2024 price increase