monday.com (MNDY) Q2 FY26 earnings call: guidance and Q&A

How would you characterize the current demand environment, especially regarding AI adoption and the performance of downmarket vs. upmarket segments?

AI adoption is strong across all segments, with very encouraging reception to new features and pricing. The overall demand environment is consistent with expectations from the beginning of the year, with no meaningful change. Upmarket motions continue to show strong growth, with record net adds in 100,000+ and 500,000+ customer cohorts, and gross retention at historical highs.

“We're seeing record net adds in our 100,000 and 500,000 cohort of customers. So this is an affirming data point that all the things we're doing to move up market is working.”

asked by Ryan MacWilliams · answered by Eran Zinman

Did you incorporate additional conservatism into the Q3 and full-year guidance compared to previous quarters?

The guidance does not assume any rebound in performance marketing or top-of-funnel activity. It's based on current conditions, with growth driven by upmarket and enterprise customer expansion, AI adoption, and disciplined investment. Factors like NDR around 108% and a 20% headcount reduction by year-end were considered.

“Our guidance does not assume any rebound in performance marketing or top of funnel activity. This is in line with what we said in the past, and we've planned the year based on the current condition with growth driven by main upmarket and enterprise customer expansion.”

asked by Ryan MacWilliams · answered by Eliran Glazer

What has changed in your view on the demand environment over the last 90 days that led to a weaker updated revenue guidance?

The updated guidance reflects the short-term impact of the 20% workforce reduction announced in July, the lapping of strong growth periods, and near-term NDR pressure from prior pricing increases. Management is being responsible and disciplined during this moment of transition and organizational restructuring.

“So the thing that has changed that we announced in July of 2022, we announced the reef in the organization. And obviously, there is a short-term impact throughout the risk that we took into account when we did the guidance.”

asked by Scott Berg · answered by Eliran Glazer

How long do you expect the elevated R&D expenses as a percentage of revenue to last, given the investment in AI functionality?

The company has invested heavily in R&D for future platform changes and does not foresee a meaningful increase in R&D as a percentage of revenue going forward, though it remains a significant investment. The strong Israeli shekel against the U.S. dollar also contributes to the elevated R&D cost as a percentage of revenue, as most R&D personnel are based in Israel.

“We invested heavily into R&D. As Eliran said, we're building into the future. We're making big changes to the platform. We don't see meaningful increase going forward, but definitely, this remains a big investment for us.”

asked by Scott Berg · answered by Eran Zinman

Will the new mandatory AI pricing model be a net benefit or come at the expense of lesser expansion, and when will its impact on NRR become clear?

It's still early days, and the company is experimenting with the new pricing model. While it's too soon to predict NRR stabilization or increase, early results are encouraging, with customers reaching their allotted quota and topping up, indicating value and creating a new growth vector. This expansion on AI consumption is a new dynamic for the company.

“Since we are in the early days, I can't tell you when this will stabilize or increase NRR. But what we do see from the very early numbers, what I mentioned is that customers do reach the end of their allotted quota and then they increase it and top up, which is, like Eran said, a new vector for us that exists.”

asked by Howard Ma · answered by Roy Mann

Where will the $100 million in annualized cost savings from the 20% headcount cut be reinvested, and what is the expected margin trajectory and top-line growth for next year?

The vast majority of the $100 million annualized cost savings will be reinvested in talent, product, and AI. Operating margins are expected to expand next year (FY27) as the company realizes the full-year benefit of the restructuring. Top-line growth is also expected to be positively impacted next year, driven by the completion of the restructure, AI expansion, and sales team training.

“So we said that the annualized cost savings from a growth perspective is expected to be $100 million. We said we're going to invest the vast majority of it going to be into talent. Product AI, obviously, there is a lot of costs related to AI.”

asked by James Wood · answered by Eliran Glazer

Are you reducing the go-to-market team in a material way, specifically quota-carrying reps?

The restructure of the go-to-market organization primarily focused on non-quota carriers and downmarket resources. The company aims to accelerate investment upmarket, which includes growing the headcount for mid-market and enterprise sales teams and leveraging partners more efficiently downmarket. There is no material reduction in quota-carrying sales reps.

“The restructure of the go-to-market organization was primarily focused around non-quota carriers and downmarket resources. And we believe this will afford us the opportunity to accelerate our investment upmarket, which includes our new for deployed engineer model and obviously continuing to grow our sales resources upmarket, meaning mid-market into enterprise.”

asked by Brent Thill · answered by Unknown Executive

Which roles were most impacted by the 20% workforce reduction across OpEx lines, and specifically, are quota-carrying sales reps at the high end still growing?

The workforce reduction flattened the organization and focused on downmarket resources and non-quota-carrying roles, where partners can be leveraged more efficiently. The company is continuing to invest in and grow its quota-carrying sales reps in the upmarket (mid-market and enterprise) segments.

“We flattened the organization on to we focus down market where it's not as an efficient cell where we think we can leverage partners more. It's non-QC roles, nonquota-carrying roles as well. So we got aligned around the right opportunity in front of us.”

asked by William Fitzsimmons · answered by Casey George