monday.com Ltd. Q4 FY2025 earnings call

• Strong execution in 2025 with revenue growing 27% y/y and operating margin reaching 14%.
• Progress in moving upmarket: Customers with >$50,000 in ARR represent 41% of total ARR; customers with >$100,000 in ARR had record net adds; customers with >$500,000 in ARR grew 74% y/y.
• AI-driven product evolution: AI agent in beta, Monday Vibe surpassed $1M ARR quickly, AI Sidekick processed over half a million user messages.
• Shift in investment: Moving to higher ROI opportunities for larger customers, improving customer buying process with AI agents.

In the fourth quarter of 2025, total revenue was $334 million, up 25% from the year-ago quarter. Fiscal year 2025 total revenue was $1.232 billion, up 27% from the prior year. Fourth-quarter gross margin was 89%, and 90% for the fiscal year 2025. Research and development expense in Q4 was $67.7 million (20% of revenue), and $238.5 million for fiscal year 2025 (19% of revenue). Sales and marketing expense in Q4 was $159.9 million (48% of revenue), and $586.8 million for fiscal year 2025 (48% of revenue). General and administrative expense in Q4 was $29.2 million (9% of revenue), and $106.9 million for fiscal year 2025 (9% of revenue). Operating income in Q4 was $41.9 million, up from $40.3 million the year-ago quarter, with an operating margin of 13%. For fiscal year 2025, operating income was $175.3 million (14% of revenue). Net income in Q4 2025 was $55 million, and $233.6 million for fiscal year 2025.

• Fiscal year 2026 revenue expected in the range of $1.452 billion to $1.462 billion, representing 18%-19% year-over-year growth.
• Full-year non-GAAP operating income expected $165 million to $175 million, with an operating margin of 11%-12%, assuming 100-200 basis points negative FX impact.
• Full-year adjusted free cash flow expected $275 million to $290 million, with an adjusted free cash flow margin of 19%-20%, assuming 100 basis points negative FX impact.
• Focus on 2026 execution, no longer discussing 2027 targets.

• Choppy demand in no-touch channels, particularly for smaller customers, impacting customer acquisition cost and ROI.
• Appreciation of the Israeli shekel versus the US dollar causing a negative FX impact on financial metrics.
• Macro economic uncertainties and volatility in performance marketing affecting go-to-market efforts.

Q: Can you maybe just touch on the growth outlook a little bit for 2026?

A: Guidance reflects what we believe we can execute against with high confidence. It doesn't assume any rebirth in performance marketing or top-of-funnel activity, and is based on current conditions with growth driven primarily by upmarket and enterprise customer expansion, multiproduct adoption, and disciplined investment and improving efficiency across the go-to-market model.

Q: Just to clarify the comment on the impact of customer acquisition cost in the space, what is the impact like?

A: What we see right now in performance marketing is choppy, with headwind in ability to buy media and ROI. We are shifting budgets to higher ROI channels and media, focusing more on higher customers with better ROI.

Q: How much core versus new product growth is baked in for fiscal year 2026?

A: When taking into account the continuous business we currently see, mostly focusing on existing products like Monday work management, Monday CRM, Monday service, and Monday dev, with new products like AI continuing to become a larger part of the business in the future.

Q: Can you quantify the headwind from the no-touch business?

A: It's choppy, and we don't know how to predict exactly, but it's baked into the guidance as we expect it to continue to be choppy throughout 2026.

Q: With all the rapid pace of innovation, how are customers evaluating Monday among alternatives?

A: Customers are interested in having a trusted partner and platform, showing up in retention and customer acquisition numbers, with the cohort of customers that are $50,000 or greater being a differentiator, and embracing AI as we lead the market with it.