Monday.com (MNDY) Q3 2025: Upmarket Pipeline Accelerates as Multi-Product ARR Tops 10%
Monday.com’s Q3 marked a decisive shift upmarket, with multi-product adoption and AI engagement driving record operating profit and a robust long-term pipeline. The company’s realignment toward larger customers and bundled solutions is reshaping revenue mix and retention, but the transition brings longer sales cycles and measured near-term upside. Investors should watch for cross-sell traction and stabilization in SMB as management doubles down on its $1.8B FY27 goal.
Summary
- Enterprise Expansion Outpaces SMB: Upmarket momentum and multi-year contracts are redefining customer mix and revenue visibility.
- AI and Bundles Fuel Cross-Sell Potential: New products and AI features surpassed targets, laying groundwork for future monetization.
- Transition Brings Timing Headwinds: Longer sales cycles and go-to-market rebalancing temper near-term growth while setting up for durable gains.
Performance Analysis
Monday.com’s Q3 2025 results highlight a business in transition, with total revenue reaching $317 million, up 26% year-over-year, and record non-GAAP operating profit. The company’s gross margin remains best-in-class at 90%, though management expects this to normalize in the high 80s over time as product mix evolves. The standout this quarter was the surge in larger customers and multi-product adoption: new products now comprise over 10% of annual recurring revenue (ARR), exceeding the 2025 target ahead of schedule.
Sales and marketing efficiency improved, with S&M expenses dropping to 48% of revenue from 52% last year, reflecting a shift from paid search to higher-return, mid-funnel channels focused on enterprise accounts. Net dollar retention (NDR) held steady at 111%, underscoring the stickiness of upmarket customers and the early impact of AI and bundled offerings. Adjusted free cash flow margin expanded to 29%, supporting ongoing investment in product and go-to-market initiatives.
- Multi-Product ARR Surpasses 10%: Reflects rapid adoption of CRM, service, and AI products, strengthening cross-sell momentum.
- Operating Profit Hits Record: Operating margin reached 15%, as cost discipline offset reinvestment in R&D and sales headcount.
- Upmarket KPIs Accelerate: Growth in $50K, $100K, and $500K accounts outpaced overall revenue, signaling successful enterprise pivot.
While growth in SMB and self-serve channels showed some choppiness, stabilization in top-of-funnel activity and a robust upmarket pipeline position the company for continued expansion into 2026 and beyond.
Executive Commentary
"We saw robust net additions of over 100k plus and 500k plus paying customers, reflecting the strength of our go-to-market engine and the expanding demand of our platform. We also reported our largest ever non-GAAP operating profit, reinforcing our ability to scale efficiently while continuing to invest in innovation."
Roy Mann, Co-CEO
"New product now accounts for over 10% of total ARR, surpassing our 2025 goal ahead of schedule. New bundle offering combining work management with CRM, service, and dev provide a unified, cost-efficient experience while accelerating cross-sell momentum."
Aaron Zimmern, Co-CEO
Strategic Positioning
1. Upmarket Focus and Contract Expansion
Monday.com is executing a deliberate shift toward larger enterprise customers, with the majority of new business now coming from $50K, $100K, and $500K+ ARR accounts. These customers sign longer, multi-year contracts—now representing 13% of ARR, up from 5% five years ago—which enhances revenue visibility and retention. This move is reshaping the company’s risk profile and setting up for deeper cross-sell and expansion opportunities.
2. Multi-Product and Bundled Offerings
The company’s multi-product strategy is bearing fruit, with new products (CRM, service, AI) exceeding 10% of ARR and bundled offerings gaining early traction. Bundles combine work management, CRM, and service into pre-configured packages, targeting both ease of deployment and commercial advantage, especially in industries with consistent use cases. This approach is driving higher customer engagement and lays the foundation for increased average contract value (ACV).
3. AI Monetization and Platform Differentiation
AI adoption is rapidly scaling, with more than 60,000 apps created on Monday Vibe, the company’s workflow automation and app builder. The introduction of Agent Factory, an AI-driven agent builder, and a new AI credit system signal a push to monetize AI usage via tiered pricing. While direct revenue impact from AI is expected to be moderate in the near term, these features are increasing customer stickiness and opening new market segments.
4. Sales Channel Rebalancing and Productivity
Sales and marketing investment is being reallocated away from paid search (now less than 10% of new revenue) toward mid-funnel, high-ROI channels and direct sales, targeting larger, higher-quality customers. This has led to longer sales cycles but higher pipeline quality and improved rep productivity, especially as internal AI tools are deployed to support the sales force. Headcount growth is set to decelerate to 20% in 2026, reflecting a transition from investment phase to operational leverage.
5. Partner Ecosystem Expansion
The partner ecosystem remains central to Monday.com’s go-to-market, especially in emerging markets and for new product lines such as CRM, service, and AI. Recruitment of new partners is ongoing, supporting both breadth and depth of coverage and accelerating international expansion.
Key Considerations
This quarter’s results reflect a business intentionally rebalancing for long-term durability, even as near-term upside moderates. The transition to larger contracts and multi-product adoption is a strategic bet on retention and expansion, but comes with operational complexity and delayed revenue recognition.
Key Considerations:
- Enterprise Mix Drives Retention: Larger accounts deliver higher NDR and longer contracts, but require more complex sales motions and support.
- AI and Bundle Monetization Still Early: While adoption is high, meaningful revenue from AI and cross-product bundles will take time to materialize.
- SMB Channel Remains Volatile: Choppiness in self-serve and SMB persists, though stabilization is emerging; future growth depends on balancing both ends of the market.
- Sales Cycle Elongation a Double-Edged Sword: Longer cycles delay revenue but ultimately yield larger, more stable deals and improved visibility.
- Headcount Growth Moderating: 2026 will see slower hiring, with investment focus shifting to product and sales productivity rather than raw expansion.
Risks
The shift toward upmarket and multi-product strategy introduces execution risk, as longer sales cycles and more complex deals could delay revenue and strain operational resources. Continued choppiness in SMB and self-serve channels poses a risk if stabilization efforts falter. Additionally, AI monetization remains unproven at scale, and any slowdown in adoption or partner ecosystem growth could limit upside. Macroeconomic uncertainty and customer budget scrutiny also add unpredictability to deal timing and expansion.
Forward Outlook
For Q4 2025, Monday.com guided to:
- Revenue of $328 million to $330 million (22% to 23% YoY growth)
- Non-GAAP operating income of $36 million to $38 million (operating margin 11% to 12%)
For full-year 2025, management maintained guidance:
- Revenue of $1.226 billion to $1.228 billion (approximately 26% YoY growth)
- Non-GAAP operating income of $167 million to $169 million (operating margin ~14%)
- Adjusted free cash flow of $330 million to $334 million (margin ~27%)
Management emphasized several factors shaping the outlook:
- Confidence in upmarket pipeline and multi-year contract growth
- Early but encouraging signs of AI monetization and cross-sell expansion
Takeaways
Monday.com’s Q3 2025 demonstrates a business at an inflection point, trading near-term upside for long-term resilience as it scales upmarket and deepens product adoption. Investors should focus on execution in cross-sell, AI monetization, and stabilization of the SMB channel to gauge the likelihood of achieving the $1.8 billion FY27 target.
- Enterprise Pipeline Is the Growth Engine: Upmarket wins and multi-year contracts are improving retention, visibility, and future expansion potential.
- AI and Bundled Solutions Are Strategic Levers: Adoption is robust, but meaningful revenue impact is a 2026-2027 story.
- SMB Stabilization Remains a Watchpoint: Sustained growth depends on balancing enterprise expansion with a healthy self-serve funnel.
Conclusion
Monday.com’s Q3 2025 reveals a company leaning into enterprise and multi-product expansion, with AI engagement and operating leverage strengthening its long-term trajectory. The pivot brings timing challenges and execution risk, but sets up a more durable, diversified growth profile as the business targets its $1.8B FY27 goal.
Industry Read-Through
Monday.com’s upmarket acceleration and multi-product strategy reflect a broader SaaS trend toward enterprise focus and platform consolidation, as customers seek unified solutions and vendors chase higher retention and ACV. The emphasis on AI-powered workflow automation and bundled offerings signals that competitive differentiation is shifting from feature velocity to platform extensibility and integration. For peers, the move away from paid search toward direct, high-ROI channels underscores the rising cost of customer acquisition and the need for robust partner ecosystems. Investors should monitor how quickly AI monetization and cross-sell can translate into tangible revenue, as this will likely define the next wave of SaaS winners.