Work management platform monday.com (NASDAQ:MNDY) announced better-than-expected revenue in Q3 CY2025, with sales up 26.2% year on year to $316.9 million. On the other hand, next quarter’s revenue guidance of $329 million was less impressive, coming in 1.4% below analysts’ estimates. Its non-GAAP profit of $1.16 per share was 32.5% above analysts’ consensus estimates.
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monday.com (MNDY) Q3 CY2025 Highlights:
- Revenue: $316.9 million vs analyst estimates of $312.4 million (26.2% year-on-year growth, 1.4% beat)
- Adjusted EPS: $1.16 vs analyst estimates of $0.88 (32.5% beat)
- Adjusted Operating Income: $47.48 million vs analyst estimates of $35.52 million (15% margin, 33.7% beat)
- Revenue Guidance for Q4 CY2025 is $329 million at the midpoint, below analyst estimates of $333.8 million
- Operating Margin: -0.8%, up from -10.9% in the same quarter last year
- Customers: 3,993 customers paying more than $50,000 annually
- Net Revenue Retention Rate: 115%, in line with the previous quarter
- Annual Recurring Revenue: $1.27 billion vs analyst estimates of $1.25 billion (26.2% year-on-year growth, 1.4% beat)
- Billings: $320.2 million at quarter end, up 21.4% year on year
- Market Capitalization: $8.57 billion
StockStory’s Take
monday.com's third quarter saw revenue and non-GAAP profitability surpass Wall Street expectations, but the market reacted negatively—shares dropped sharply following the results. Management attributed quarterly momentum to strong expansion among larger enterprise customers and accelerating adoption of new AI-powered products. However, CEO Roy Mann acknowledged that the transition toward targeting bigger accounts brought longer sales cycles and timing effects, which affected the magnitude of upside versus prior quarters. Co-CEO Eran Zinman highlighted that new product launches—particularly those leveraging AI—were well received by customers, while CFO Eliran Glazer pointed to improved operational efficiency and stable net revenue retention as supporting factors.
Looking ahead, management’s guidance signals a more measured growth outlook, with next quarter’s revenue forecast coming in below analyst expectations. The leadership team emphasized their commitment to upmarket expansion and multiproduct adoption but noted that the shift to larger customers may temporarily slow growth as sales cycles lengthen. While CFO Eliran Glazer expressed confidence in reaching long-term targets, he admitted that near-term pipeline conversion could be affected by ongoing rebalancing of go-to-market investments. CRO Casey George stressed that cross-sell opportunities and increased adoption of AI products are expected to become more significant revenue drivers in the coming year.
Key Insights from Management’s Remarks
Management attributed quarterly performance to robust enterprise customer expansion, rapid adoption of new AI features, and a strategic pivot to higher-value sales channels. Deviations from consensus expectations were primarily driven by longer sales cycles and reallocation of go-to-market resources.
- Enterprise customer focus: The move upmarket drove solid net additions among accounts spending $50,000 or more annually, with improved retention and higher expansion rates seen in these cohorts. Management highlighted that these customers now form the majority of new business, fundamentally changing the company’s revenue mix.
- AI product traction: New AI-powered offerings, such as monday campaigns and Agent Factory, gained rapid adoption. Co-CEO Eran Zinman described customers’ ability to build custom workflow solutions using Monday Vibe as a differentiator, citing real-world examples where clients built complex reporting tools in minutes.
- Multiproduct strategy execution: Over 10% of total annual recurring revenue (ARR) now comes from new products, surpassing internal goals ahead of schedule. Leadership noted that only a small share of customers currently use more than one product, highlighting significant cross-sell potential.
- Go-to-market channel shift: Investment shifted toward mid-funnel channels—targeting larger opportunities—at the expense of traditional paid search and performance marketing. While these new channels present longer sales cycles, they are seen as generating higher-quality pipeline and sustainable growth.
- Operational efficiency gains: Sales and marketing expenses declined as a percentage of revenue, and the company reported record non-GAAP operating profit. CFO Eliran Glazer stated that most incremental hiring and investment is now focused on sales, product, and R&D, with a planned slowdown in headcount growth for next year.
Drivers of Future Performance
Management expects growth to be powered by further upmarket expansion, increased AI product adoption, and multiproduct cross-sell, but recognizes that sales cycle length and top-of-funnel stabilization will influence near-term results.
- Longer sales cycles upmarket: The company’s focus on larger enterprise customers has led to longer sales cycles, which management says may delay the conversion of pipeline into recognized revenue but should drive higher deal values and retention over time.
- AI monetization and bundling: Recent launches of AI tools and bundled product offerings are expected to improve customer value and drive upsell, although CFO Eliran Glazer cautioned that material AI-related revenue contributions will likely be moderate in the near term.
- Stabilization in customer acquisition: Leadership pointed to early signs of stabilization in top-of-funnel activity, particularly in mid-market and SMB segments, following a period of choppiness in paid search and digital channels. Sustained improvement here is seen as key to meeting consensus revenue targets for next year.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) whether upmarket pipeline conversion accelerates as longer sales cycles mature, (2) adoption rates and monetization of new AI-powered offerings and bundled products, and (3) stabilization or improvement in mid-market and SMB customer acquisition channels. Progress on cross-sell initiatives and execution of the multiproduct strategy will also be critical signposts for sustained revenue growth.
monday.com currently trades at $167.72, down from $189.96 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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