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monday.com's Q3 non-GAAP EPS rose 84.5% to $2.14, beating estimates as revenues grew 19.2% to $377.5M.
Cost cuts and lower marketing spending lifted MNDY's non-GAAP operating margin to a record 24%.
AI ARR hit $36 million, but overall net dollar retention eased to 108% amid longer enterprise sales cycles.
monday.com Ltd. (MNDY - Free Report) reported third-quarter 2026 non-GAAP earnings of $2.14 per share, an 84.5% increase from $1.16 a year ago. The figure beat the Zacks Consensus Estimate of $1.43 by 49.65%.
Revenues rose 19.2% to $377.5 million and surpassed the consensus mark by 2.32%. Workforce restructuring and tighter discretionary spending supported profitability, while annual recurring revenues (ARR) from AI offerings reached $36 million despite slower small-business demand and longer enterprise purchasing cycles.
MNDY's AI Usage Builds Under Hybrid Pricing
The company's paid AI usage continued to broaden. monday Agents have logged more than 6 million interactions since launch, while AI blocks processed more than 122 million actions. Sidekick handled more than 4.7 million conversations, and Notetaker captured more than 375,000 hours of meetings.
Management also highlighted that more than 30% of accounts with ARR above $50,000 purchased and used AI credits. AI usage in this cohort was 4.4 times that of other customers. Recently launched Harmony brings voice AI to sales teams, while monday Frontier adds hands-on implementation services.
Paid customers generating more than $50,000 in ARR grew 26% year over year to 5,038. Accounts above $100,000 increased 33% to 2,127, and those above $500,000 jumped 58% to 123. Net additions were 204, 108 and nine customers, respectively, across these thresholds.
These groups contributed 44%, 31% and 7% of total ARR, respectively, up from 40%, 27% and 6% a year earlier. New products, including monday CRM, monday campaigns, monday dev and monday service, accounted for 11.7% of ARR. Among $50,000-plus accounts, 41% used multiple products, up from 29% a year ago.
MNDY Sees Pressure on Retention and Sales Cycles
Overall net dollar retention, which tracks changes in recurring revenues from existing customers, declined to 108% from 111% a year earlier and 109% in the previous quarter. Retention stood at 112% for customers with more than 10 users, 114% for $50,000-plus ARR customers and 113% for $100,000-plus accounts.
The company cited reduced small-business additions and higher logo churn as it directed sales resources toward larger accounts. Sales cycles lengthened as enterprises scrutinized AI spending and deployments. The July restructuring disrupted sales execution, and management expects buying headwinds to persist into 2027.
monday.com Gains Margin From Lower Spending
Non-GAAP operating income climbed 88.2% year over year to $89.4 million, while operating margin widened to a record 24% from 15%. Non-GAAP gross margin narrowed to 88% from 90%, despite the operating improvement.
Non-GAAP research and development expenses rose 21.1% to $70 million. Sales and marketing costs fell 4.2% to $145.4 million, while general and administrative expenses increased 8% to $29.1 million. Headcount ended at 2,479, down 690 sequentially. Management credited restructuring savings, reduced travel and fewer marketing events for the stronger margin.
MNDY's RPOs Show Continuing Customer Commitments
Total remaining performance obligations (RPOs), a measure of contracted revenues not yet recognized, rose 26.6% year over year to $946 million. Current RPOs, expected to be recognized within 12 months, increased 22.4% to $759 million.
Sequential growth was more modest. Both measures rose $9 million from second-quarter levels of $937 million and $750 million, respectively.
MNDY’s Q3 Balance Sheet & Cash Flow
As of Sept. 30, 2026, MNDY had cash and cash equivalents of $869.6 million, while marketable securities were $229.8 million. Combined liquidity rose to roughly $1.10 billion from $1.07 billion at the end of June.
Net cash provided by operating activities was $20.4 million in the reported quarter, down 78.6% year over year.
Adjusted free cash flow fell 31.7% to $63 million, while adjusted free cash flow margin was 17% compared with 29% a year earlier. The adjusted figure excluded $47.2 million in restructuring-related cash payments.
MNDY’s Q4 & 2026 Outlook
For the fourth quarter of 2026, monday.com forecasts revenues of $380 million to $382 million, implying around 14% year-over-year growth. Non-GAAP operating income is projected at $68 million to $70 million, with a margin of approximately 18%.
For 2026, management expects revenues of $1.473 billion to $1.475 billion, reflecting approximately 20% growth, and non-GAAP operating income of $268 million to $270 million. Adjusted free cash flow is projected at $282 million to $288 million, with a margin of 19% to 20%. Guidance assumes a negative foreign-exchange impact of 100 to 200 basis points on margins.
MNDY’s Zacks Rank & Other Stocks to Consider
Currently, monday.com flaunts a Zacks Rank #1 (Strong Buy).
View the Zacks #1 Rank List
Image: Shutterstock
MNDY Q3 Earnings Beat Estimates on Cost Cuts, Revenues Rise Y/Y
Key Takeaways
monday.com Ltd. (MNDY - Free Report) reported third-quarter 2026 non-GAAP earnings of $2.14 per share, an 84.5% increase from $1.16 a year ago. The figure beat the Zacks Consensus Estimate of $1.43 by 49.65%.
Revenues rose 19.2% to $377.5 million and surpassed the consensus mark by 2.32%. Workforce restructuring and tighter discretionary spending supported profitability, while annual recurring revenues (ARR) from AI offerings reached $36 million despite slower small-business demand and longer enterprise purchasing cycles.
MNDY's AI Usage Builds Under Hybrid Pricing
The company's paid AI usage continued to broaden. monday Agents have logged more than 6 million interactions since launch, while AI blocks processed more than 122 million actions. Sidekick handled more than 4.7 million conversations, and Notetaker captured more than 375,000 hours of meetings.
Management also highlighted that more than 30% of accounts with ARR above $50,000 purchased and used AI credits. AI usage in this cohort was 4.4 times that of other customers. Recently launched Harmony brings voice AI to sales teams, while monday Frontier adds hands-on implementation services.
monday.com Ltd. Price, Consensus and EPS Surprise
monday.com Ltd. price-consensus-eps-surprise-chart | monday.com Ltd. Quote
monday.com Broadens Its Enterprise Footprint
Paid customers generating more than $50,000 in ARR grew 26% year over year to 5,038. Accounts above $100,000 increased 33% to 2,127, and those above $500,000 jumped 58% to 123. Net additions were 204, 108 and nine customers, respectively, across these thresholds.
These groups contributed 44%, 31% and 7% of total ARR, respectively, up from 40%, 27% and 6% a year earlier. New products, including monday CRM, monday campaigns, monday dev and monday service, accounted for 11.7% of ARR. Among $50,000-plus accounts, 41% used multiple products, up from 29% a year ago.
MNDY Sees Pressure on Retention and Sales Cycles
Overall net dollar retention, which tracks changes in recurring revenues from existing customers, declined to 108% from 111% a year earlier and 109% in the previous quarter. Retention stood at 112% for customers with more than 10 users, 114% for $50,000-plus ARR customers and 113% for $100,000-plus accounts.
The company cited reduced small-business additions and higher logo churn as it directed sales resources toward larger accounts. Sales cycles lengthened as enterprises scrutinized AI spending and deployments. The July restructuring disrupted sales execution, and management expects buying headwinds to persist into 2027.
monday.com Gains Margin From Lower Spending
Non-GAAP operating income climbed 88.2% year over year to $89.4 million, while operating margin widened to a record 24% from 15%. Non-GAAP gross margin narrowed to 88% from 90%, despite the operating improvement.
Non-GAAP research and development expenses rose 21.1% to $70 million. Sales and marketing costs fell 4.2% to $145.4 million, while general and administrative expenses increased 8% to $29.1 million. Headcount ended at 2,479, down 690 sequentially. Management credited restructuring savings, reduced travel and fewer marketing events for the stronger margin.
MNDY's RPOs Show Continuing Customer Commitments
Total remaining performance obligations (RPOs), a measure of contracted revenues not yet recognized, rose 26.6% year over year to $946 million. Current RPOs, expected to be recognized within 12 months, increased 22.4% to $759 million.
Sequential growth was more modest. Both measures rose $9 million from second-quarter levels of $937 million and $750 million, respectively.
MNDY’s Q3 Balance Sheet & Cash Flow
As of Sept. 30, 2026, MNDY had cash and cash equivalents of $869.6 million, while marketable securities were $229.8 million. Combined liquidity rose to roughly $1.10 billion from $1.07 billion at the end of June.
Net cash provided by operating activities was $20.4 million in the reported quarter, down 78.6% year over year.
Adjusted free cash flow fell 31.7% to $63 million, while adjusted free cash flow margin was 17% compared with 29% a year earlier. The adjusted figure excluded $47.2 million in restructuring-related cash payments.
MNDY’s Q4 & 2026 Outlook
For the fourth quarter of 2026, monday.com forecasts revenues of $380 million to $382 million, implying around 14% year-over-year growth. Non-GAAP operating income is projected at $68 million to $70 million, with a margin of approximately 18%.
For 2026, management expects revenues of $1.473 billion to $1.475 billion, reflecting approximately 20% growth, and non-GAAP operating income of $268 million to $270 million. Adjusted free cash flow is projected at $282 million to $288 million, with a margin of 19% to 20%. Guidance assumes a negative foreign-exchange impact of 100 to 200 basis points on margins.
MNDY’s Zacks Rank & Other Stocks to Consider
Currently, monday.com flaunts a Zacks Rank #1 (Strong Buy).
Dell Technologies (DELL - Free Report) , MongoDB (MDB - Free Report) and Forgent Power Solutions (FPS - Free Report) are other top-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. Dell Technologies, MongoDB and Semtech sport a Zacks Rank #1 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dell Technologies’ shares have surged 175.1% year to date. DELL is scheduled to report its third-quarter fiscal 2027 results on Nov. 24.
MongoDB's shares have fallen 22% year to date. MDB is scheduled to report its third-quarter fiscal 2027 results on Dec. 1.
Forgent Power Solutions’ shares have declined 22.1% year to date. FPS is slated to report its first-quarter fiscal 2027 results on Nov. 12.