Monday.com: 'There's confusion buying AI, implementing AI'

Monday.com is seeing solid growth for its collaborative work platform, has plans to move upmarket and is transitioning to more of a consumption model. But the biggest issue is that customers are being wary about buying AI, implementing it and getting returns.

Speaking on the company's third quarter earnings call, Monday co-CEO Eran Zinman said:

"From talking with customers, Monday customers and non-Monday customers, I feel there's a lot of confusion today in the market about buying AI and implementing AI. Customers want return on investment. They want to adopt AI to actually make impact on their business."

Zinman and Monday are coming off the company's Elevate conference where the company announced the following:

• Datasets, a new entity built on mondayDB and integrated into workspaces. A single dataset can now grow 10x.
• Organization Hub, which is one place to see every account across an AI workspace, CRM and service.
• Advanced work management tools for projects, items per bulk import, boards in dashboards and connections when linking boards.
• Monday is also rolling out a forward deployed engineer operation called Frontier.

Co-CEO Roy Mann noted:

"We're navigating broader market headwinds. These contributed to some moderation in our growth rate, net dollar retention and net additions this quarter. We're also in the middle of a major transition as a business, shifting our core vision from managing work to doing the work with people and AI agents operating together."

The company's strategy revolves around making its platform AI first, moving upmarket and focusing on larger enterprise customers, combining seats and consumption and selling service and implementation. As this transformation is happening, Monday is also coming off a 20% workforce reduction.

Monday is seeing SMB churn and fewer customer additions yet in larger accounts AI spend is ramping.

For the third quarter, Monday fared well. The company reported third quarter earnings of 80 cents a share on revenue of $377.5 million, up 19%. Monday's largest customer deployment now has 87,000 seats. AI ARR in the quarter was $36 million and the company's AI agents have passed the 6 million interaction mark.

The challenge for Monday is that growth is decelerating. Monday said fourth quarter revenue will be $380 million to $382 million, up 14% from a year ago, but below Wall Street estimates.

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Zinman said Monday's transformation will extend into 2027. "This is a broad company-wide change and transformation that we're going through as a company. It's a change that we believe in. It's very strategic for us. And based on the feedback that we've seen from customers and the adoption, we believe it's the right change for the company," said Zinman. "It's not a change that will happen in the quarter. We're looking at that to continue into 2027. It's a major change."

Casey George, Monday's chief revenue officer, said buying cycles went longer. Larger customers are figuring out where to apply AI and are being deliberate about spending.

Eliran Glazer, CFO of Monday, summed up the issues:

"When we are presenting Q4 guidance, we're going down from 19% into 14%. It implies slowdown. And we called it out this quarter, and let me reiterate this. So we said there is a down market headwind that we softer small customer trends, and this is something that we believe is not going to get better going into Q4 and even will continue to 2027.

We are seeing more deliberate buying behavior and longer sales cycles. Part of it is impacted obviously by the RIF (reduction in force). So customer takes also a closer look at how AI fits into the businesses. And this is what maybe slows down the market expansion and upgrade. And we are also looking at the near-term disruption, maybe not directly from the people that was part of the RIF, but the way it impacts the organization."