We should just do a keynote.
Yeah.
Now we're talking about.
All right. Sounds like real life. Hey, everyone. Thanks for coming. Delighted to have you with us, the monday.com co-CEO, and co-founder Roy Mann, and Byron Stephen, who's VP of Investor Relations. Thank you, guys, for joining.
Thank you for having us.
Thank you.
We have really outdone ourselves. I should compliment myself, right? Last time, it was standing room only. Now it is the biggest room in the conference, I think. It is great. Maybe we can start with a little bit of an introduction, Roy, about monday.com for people in the audience who do not know about it.
Cool. Yeah. Monday, I started it with Eran, with the idea that we want to change how people use work software. We use a lot of work software in the companies we worked for. We always kind of customized it with our coding abilities. Our backgrounds both are developers. We wanted to give that power to customers and have them also like the software they use. Enterprise software is something people often do not like using because it is not easy to use. It is not fun. It is not what you want it to be. You often need to fit yourself to the software instead of the software doing what you want out of it. That was the initial idea. It worked really well. We got it out. We saw a massive explosion of different use cases.
People used it for many, many different things, which was great. Over time, we saw that we needed to commit to a roadmap for different use cases or different products. While we started with a more project management, work management style go-to-market, a lot of our customers use this as a CRM. You do not sign up for a project management system for a large organization and say, hey, I think it can be a CRM. You want the commitment from the other side. We built different teams to kind of build different products on top of the platform we have.
That's like a superpower we have, essentially, that the platform is so strong that we can compete on different markets and different software areas, whereas the competitors we have in each one of those segments do not really compete with each other because we're able to kind of take that platform and make it fit to different areas.
Customization and flexibility of the platform to fit two different use cases, essentially.
Yeah.
Yeah. Great. I want to ask you, obviously, Monday has been performing really well, right? It's been growing 30%, over 30%. Last quarter, over a billion-dollar run rate, generating a tremendous amount of free cash flow. And in an uncertain macro environment in a competitive space, while all your competitors have kind of slowed down, fallen by the wayside, talk about what is driving that differentiated performance for M onday. Is it the platform that you were talking about? Is it something else at this point, too, consolidation, ROI? Maybe touch on those.
I think it's a few vectors. One is that we have different areas we work in. We're also a CRM. And we're also work management. We have a dev product and now a service product. I don't know anyone that plays on all those four areas. We kind of give us a lot of stability and growth. Second, we're really good with the non-tech segment. Like 70% of our customers are not tech companies. That gives us a lot of stability across those different industries. We also are really successful in keeping and retaining our customers and scaling with them and scaling in them. Because for large customers, we are very shallowly penetrated within the massive enterprise customers. We're also able to improve and deepen the product capabilities and scale to kind of go after larger and larger enterprise customers.
All those stuff, I would say, supports the growth.
Yeah. We obviously continuously talk with your customers and partners. One of the things I recently heard, somebody told me that this particular deal this customer bought, monday.com, they generated an incremental $500,000 in revenue per month, with Monday TCO being $300 for the year. That's a tremendous amount of kind of ROI. What do you hear, around, in a broad spectrum, around ROI when you're talking to customers?
Yeah. ROI is always difficult to measure because it's so varied use cases. The places we do deeper research with the customers, we find tremendous things. It's always like somehow there are two areas of ROI. One is saving costs and saving time and automating things and processes. I think that's the lower, the least interesting one. I think the more interesting one, which is harder to measure, and I think that's where people really love us, is where they can do stuff way faster. They can accomplish more. They can grow more. We saw in those areas some that really attributed to us talk about techniques improvement in their ability to ship things faster and really improve their revenue and those kind of things. We're super excited about that.
Also, with AI, by the way, we see some really good early signs of people really taking advantage of the platform to achieve great things.
Yeah. I'll get to AI because that's.
Of course.
That's doing it [obviously] Before I do that, I mean, your core on Monday. the CWM platform, is still the vast majority of your ERR, right? It's still, I don't know, probably over 90% of ERR at this point. I think there are a lot of investors who are kind of thinking, OK, how do we think of the growth of that business going forward? That business has been supported by a little bit of a pricing in the last several quarters. Going forward, how should we think of the growth drivers for that core business? You have created a platform, CRM. You have revenue from those or ERR from those coming. How should we think of the CWM piece of the business? Is it driven by kind of tier upgrades, seat growth? Help us understand how do you think about that.
Yeah. So for work management, there are a few pieces to it. A major one is we expand within our larger customers, grow and grow and grow and manage more and more things with us. We are the leaders of the market. We see that we want to be better and better and kind of lead with a lot of different things. One of the things we released in the last quarter is our EPM offering, Enterprise Project Management on top of the work management, which is a very deep cross-company ability to manage things at scale. I think there we broke kind of like a trade-off between teams doing whatever they want and having the tool kind of help them. Then they create silos in the organization if they all pick different tools.
We give them the ability to do basically whatever they want. We also now, with standardization, allow the CIO or the top management to kind of force a structure across how everyone works. There is no trade-off. You both get governance and the ability to understand everything as a whole, but give each team the ability to customize to what they want and how they run things so they will find the product still something that helps them and not something they need to do to report up. I think those kind of things we're building helps us grow into other pockets of value within our customers and grow even more within our largest customers and also give more value to the small ones. We kind of look at the 360 of it. We still see we can grow a lot.
Having, let's say, a more mature customer base right now, which is around 250,000 customers, we expect, and it's like, I don't know, a law of large numbers, that the growth will start shifting more and more into the existing customers rather than the new demand out there.
I think it's really important to highlight we're just getting started in the enterprise space. We had a really big unlock with the infrastructure work we did with MondayDB. Prior to MondayDB, our largest seat count was 7,000. Now we're up to 80,000. We've seen leaps and bounds in scalability. That has really opened up that enterprise space for us. That is why the enterprise segment is now our fastest growing segment. We feel like we can penetrate even further with the CWM space as we push more with MondayDB and the features that we're offering that Roy mentioned in the enterprise space as well.
Yeah. On that point, I think in the analysis that you had kind of highlighted, if I remember that correctly, something like 61% of Fortune 500 uses you. But your penetration was, I want to say, single-digit percentage or something like that?
Yeah. I think the average seat count was around 275. So really remarkable the opportunity we think we have there.
Yeah. OK. You talked about MondayDB. We are through two phases of MondayDB, I think, at this point in time. The third phase is kind of coming. How should we think of that unlock with the third phase? I remember with the third phase, there was some kind of a monetization aspect to it with some very power users, I believe, if I remember that roadmap.
Yeah. Do you want to?
Yeah, obviously. MondayDB, it's like we gave it a name, but it's part of the infrastructure. It's like our database, all accounts run on MondayDB. It's not a product you can buy or not buy. We did talk about monetization of large-scale usage of the infrastructure in general, but nothing specific to MondayDB. We also don't think this is the way for us to scale revenue necessarily, but more to direct customers to the right way of implementation. It is unlocking a massive amount of new use cases at scale. Customers can use us for a lot more things now that we're able to do the same magic we do of customization and automations on that and security and permissions and governance and all that stuff, but now at scale.
That usually doesn't happen together, that you can do all the tricks and magic of anything you want, but then it can scale as well.
Since I have you, Roy, I'll go off script a bit. I'm going to ask a little bit on MondayDB because I think a lot of confusion on what it is, actually. I've read some things around how you changed the entire data architecture with three different databases and how you kind of maybe explain it a little bit.
OK. I'll explain the challenge. First off, we don't have anything rigid in the data structure. Every account kind of defines what they want. Every use case, every board you create, you can create whatever columns you want. Columnar databases do not have that. You need to define whatever you want, and then you can optimize the scale, say, OK, this field is important, so the database knows that, and then it scales on it internally. When you allow everyone to do whatever they want, you don't have that knowledge so much. Scaling that is a real challenge. I'll give you some examples that are not related to a database even. We have a formula column. It's a column that you can calculate other columns from and do any type of calculation.
Essentially, it's a column that is dependent on other columns to calculate. And then people can build automations on top of that column. When it changes to something, send me an email. That's also not a database capability. And then you have permissions. You're allowed to see that column. I am not, sorry. If I put it in a dashboard and it aggregates all that data, it's also a challenge. Databases do not do those stuff. It's not in the database. It's usually in the application layer, permissions and calculations, all that stuff. We had to build something that does all these things. We called it MondayDB. It's in the infrastructure of Monday.
Like I remember, even like I just mentioned it in a conversation before, 10 years ago, I know companies who have done an overnight calculation of a hierarchy of projects just to get to know where they are. They needed overnight calculations, all this stuff. Our customers, for some reason, want it in a second. You change a column, it calculates, send automations, and show it in the dashboard. Yeah, let's support millions of records with that. It is like something that did not exist until now in a very general structure. We are pulling it off.
Yeah. Understood. Let's go a little bit current about Q1. And Byron, I'll turn to you for this. You had pretty good Q1 results. The beats versus your guidance were pretty normal cadence that we have seen. At the same time, I think you had a little bit of an FX benefit versus what maybe you were expecting before, right? A lot of investor conversations when I was talking after the quarter, there was a little bit of a skepticism on how much was the FX benefit. If we take out the FX benefit, the beat was maybe lower than typically we see. It's a little bit of a nitty-gritty. I don't know if you'd say investors are looking too much into one quarter. Or would you say there was something that put a little bit of pressure in Q1?
We actually did have a little bit of FX drag on our results in Q1. It was not enough to get the 30% growth rate to round up to 31%. So we did not mention it. I would say what was more remarkable about Q1, and it really started in December, is just the consistency of results that we saw, both from a segment perspective, from a geographical perspective. We saw just very steady results. That has also carried into early Q2 as well. We have been very happy with the underlying performance of the business. We have not seen any sort of weakness yet that we would call out. That being said, I am sure [Pendulum] will talk a bit about how we thought about guidance. We did build a little bit of additional conservatism into the remainder of the year just based on all the uncertainty we were seeing.
Just double-click on that point. You have not seen any weakness yet? Are you talking about even in April, May time frame? And what are you talking about exactly? The pipeline, top of funnel, those?
Yeah. All that. All that. I would say, though, we understand that 45% of our ERR sits with SMB. They could be impacted by a lot of the tariff conversations that were happening. Because of that, we largely built that into guidance to assume that it could happen immediately and could have a more outsized impact to our customer base.
Yep. Got it. Moving on to the rest of the platform. Like Sales CRM has been doing tremendously well for you. I think you have 31,000 or so accounts. What I keep on hearing is it's still largely for SMB companies, right? I want to ask you, is it just a matter of time that it starts scaling towards mid-market enterprise? Are there certain features, capabilities that are missing? Is there an update coming which might actually help you make that jump towards mid-market enterprise?
Yeah. So first off, we also have large customers. It's just that the demand out there when we do our performance marketing engine is really good with SMBs as well. There is a gap in the market, like in the capabilities that you want a fully customizable CRM. But then when you go to the big large platforms out there, it costs an arm and a leg and a lot of time to customize it to what you want. With us, it's like inherent to the system while being still easy and fun to use. I think we're in the middle between rigid CRMs and expensive and slow-to-implement CRMs. We're kind of like in that middle. It's a great offering for SMBs and low-bid market companies.
Yeah, as we scale and also with MondayDB and the number of records we can hold, we can scale into larger and larger organizations. We're still using Salesforce because of that reason. When we started, we couldn't handle the scale that Monday had. I'm looking forward for us to be able to handle the scale that we are at with Monday.
Is there a time frame that you think you make that jump?
No. It's the same time frame for MondayDB to scale to those numbers. It's a massive engineering feat to be able to support both those things. We're always scaling up. We're always scaling up. Our scale is pretty massive.
Yeah. What about cross-sell into the base? Because a lot of these CRM accounts, I believe, are still new, right? That cross-sell part of it, is that growing over the last few quarters?
With SMBs, it's easy. They search in Google. They find us. It's also easy to cross-sell that way if you need to. With the larger organizations, it's not that you just call them up and say, hey, let's replace your CRM because you're using us for work management or dev. It's also something we're really happy to see with service that is happening, that we kind of talk with the same buying persona that we have for all the other products and sell them service. In CRM, it's not like that. If we have dev, it's not the same person who would implement the CRM. We need to navigate within the organization. It needs to be in the right time. We're seeing that happening really well with service. In CRM, it's easier, let's say, or we have better options with new.
The world is still digitizing. There is a lot of greenfield out there of new businesses moving away from spreadsheets and how they manage stuff and want to digitize. CRM is one of the biggest areas of digitization out there. It's probably the top one. I would say work management is the second that they look for to change how they work. That's also lots of demand we're capturing in that area.
Yeah. I want to touch on one more thing around CRM is add-ons. You've been adding a lot of add-ons. I think maybe for CWM as well, you have a lot of add-ons now. I don't think investors are thinking of add-ons as a separate line item, right? Help us understand the opportunity with add-ons versus kind of just the base price that you have.
Yeah. These add-ons are, excuse me, more targeting kind of that enterprise tier and more of an enterprise type of customers. You are looking at managed services, premium support, premium security with our Guardian product. We also have our Canvas product and WorkForms product. These have grown very, very quickly, [Pendulum]. These were kind of things we announced at the last investor day. They do have, I would say, a material ARR that is being generated from them. At this time, not looking to report them separately. I think we are very happy of, one, the progress we made from a product perspective for them and how much they are being adopted by the enterprise type of customers.
You said material ARR. I just remembered.
Material ARR.
OK. Got it. Roy, let's talk about AI. AI A ctions have been doing really well for you. AI strategy for you is broader than just AI Actions, right? Talk about the overall strategy. How are you approaching AI?
Yeah. In general, we see AI as a technology and not as a product. We build products with AI. When we look into monetization, we want to monetize the value out of each product rather than say, OK, we monetize AI. We have launched three pillars to our strategy, which we have, in the last quarter, added more stuff we are doing. Let's talk about the three. One is AI Blocks, which is inherent capabilities within the Work OS to embed AI in every action you do. I'll give an example soon. The second one is AI Power-Ups, which is embedded within our products. The best example for that would be risk management for portfolios of projects, that you have an AI that goes after every single change.
If there are risks that you will not meet the budget or the timeline of a project, it surfaces it instead of now, where people just do not say until the last minute. You know, it is like a massive improvement to how people can manage projects that could not have been done until now. The third pillar of our AI strategy is agents, which is essentially someone you can talk to that builds stuff, that does stuff, that can help you manage things within the account itself. With the first one, which we monetized, and it is the only one we monetize specifically, the Blocks, you have actions you can pay for. An action is like, for example, you have a—I give that example often because it is cool and simple. We have a CV screening board that you have CVs coming in.
You have a column that you want to say whether a person had like five years of experience in SaaS. That's usually something a human would need to read the CV to figure out. You just add a column that says yes or no to that question and write a prompt, five-year experience in SaaS. The AI goes into the CV, goes after every company that person worked for, figures out whether they're SaaS or not, and then piles up an answer according to the number of years they worked there. That's like a very complex task that only a human could have done until now. It does automatically. You can also pull the email, phone number, anything else you want, and then sort the CVs and don't read any of them and know which one to contact.
That saves a lot of time and a lot of effort. Each one of those pieces of information you pull out is an action. It triggers the LLM to do an action. Whether it is complex or simple, same. It is one action. We price for it. That is why we are still testing it out in terms of pricing and trying to see what is the right fit so we can have a very wide usage of everyone, but still capture enough of the ones who get a lot of value. It is still early for us to say what we should expect in terms of revenue for those stuff.
One thing on pricing for AI is what I've read. I'll ask you in terms of how you have differentiated versus Asana, Smartsheet, others. This is what I've read. I don't know if it's true. It is an outcome-based model for Monday versus seems like it's not for others. Maybe talk about that. What do you mean by outcome-based?
For AI specifically?
For AI Actions.
Yeah. We do not price for general usage. We price for the thing you actually use. If you find that something does not work for you, you stop doing it, and then you do not pay. The result is dependent on the user itself, whether they like it or not. There is no general payment. We separated the payment completely from anything else you pay. If you are like a massive enterprise and you use 500 actions, you will still pay for that 500 actions like an SMB would. It is completely separate pricing that is per your usage. You obviously will not use it a lot if you do not get the value. We kind of split it completely.
That's part of our strategy to also add other monetization methods that are not seat-based, that are based on value and scale rather than people using it or people that you hired.
Yeah. So 26 million AI Actions exiting Q1. It was 10 million exiting Q4. So 16 million in Q1, I guess. I think a lot of people are kind of doing the math, right? 16 million multiplied by $0.08 or whatever. Talk about that monetization. I mean, should we not do that math and wait because you're not driving that monetization as of now? When should we think of that kind of contribution from AI becoming material? Is that more of a 2026 story?
Yeah. Yeah. Bottom line, don't do that math.
Yeah. I think we're still trying to figure out what is the key metric you should be looking at there. I think, as Roy was kind of touching on with AI, we're really just about education and adoption. Those are really the two areas that we're now focused on. Our AI Blocks, a lot of the AI Actions are still relatively new. Our customers are still getting familiar with them. Monetization will come. I think we are seeing some ARR that's being generated. It is not material yet. I think it's more of an FY 2026 event.
Yeah. A lot of customers still have the free actions. Just dividing it doesn't make sense. We're trying that everyone will try it out.
Yeah. Actually, maybe I should see for questions. I think we have a mic somewhere. It's such a big room. I don't even know where the mic is. OK. There is a mic at the back if somebody has a question. No? OK. Let's talk about the bots side because that's super new. We have not seen, I think you launched, did you launch one for kind of an internal bot that was supposed to launch in March?
The Monday agents?
The agents.
Expert, yeah. We have rolled it out for a closed beta. And we're experimenting with it. I think MCP changed a lot of the rules and what we can expect and what speed. We're seeing amazing things you can build out of the MCP we've built. You just ask it to do stuff. It builds great things on Monday. Yeah, I think we're on the right path there as well.
How do you monetize agents? Is that not flushed out yet?
It's hard to say because I would love our salespeople to use it. When they talk with someone and he says, I want this and that, we won't say, OK, we'll hook up a sales engineer with you or whatever. They'll just like, let's build it. You get it. The agent will also explain to you how to use it and why it's built like that and kind of harness all the power we have and knowledge of great solutions that really help customers and the ones they succeeded with and kind of bake that in there. I think it'll drive a lot of adoption and a lot of new powers into people's hands that are builders. Most of our customers are those more technically -oriented people. They are not afraid of trying stuff. I think they're going to find that amazing.
I would not want to try and monetize that because whatever solution they build, whatever thing they do, they are going to add more people to it. It is going to deepen our penetration and win rate and everything else. My bet now is that for that specific agent, I would try to have it be in everyone's hands. On other agents that actually do work and solve problems, we are a great place that people tell us what they are planning to do. They have the tasks. We are trying to see how we can get agents or AI to create and complete tasks for you. The easiest one to understand is obviously Monday Code, like Monday Dev. You can have a task to do something, and AI can just write the code and say, OK, I am ready.
A lot of, so we're thinking also in that area. That you can definitely monetize if AI does things for you. When you think about it, there are so many. I think there's a lot of solutions coming out every day to accomplish things. People can't really keep up with them. If we can just say, OK, this task belongs to that service, why not try and let that happen? You work with that agent to get to where you want to with creating images, content, code, or anything else, basically. I think that's like a place for us to be where bots and humans kind of work together and kind of break things out to what you want each part to do.
OK. We have about one minute left. I want to ask one question, Byron. In our last earnings call, I think Eliran kind of reiterated his confidence on the achievability of the base case for the medium-term model, which calls for a 30% growth rate. He also said something like some potential improvements in the margin target. There was a language like that. Maybe talk about what gives you.
What did he say?
What gives you that confidence? What is he talking about?
I think just the track record. I'd start first with the margins. We've consistently shown improving margins each year. We're showing GAAP profitability well ahead of, I think, where most people anticipated us to be from a top-line growth perspective. We grew 33% last year, which is above the base case guidance that we gave. From a cake perspective, you've got a lot of things coming online. You've got services now maturing into a full product. You've got CRM going into mid-market. You've got all those add-ons that we talked about that are generating good ARR. I think there's a lot of things to be very optimistic about that base case scenario and be able to hit high 20s to low 30s revenue growth.
OK. With that, we're out of time. Thank you so much, guys.
All right.
Thanks , everyone.