Monday.com Ltd. delivered a robust first-quarter performance that exceeded Wall Street forecasts, sending shares higher in Monday trading. The company reported revenue of $351.3 million, a 24% year-over-year increase that surpassed the consensus estimate of approximately $339 million. Adjusted diluted earnings per share came in at $1.15, also topping the $0.96 analyst projection.
The results provided a much-needed boost to a stock that has been battered in 2026. Shares of the Tel Aviv-based company closed at $76.91 in regular Nasdaq trading, up 6.7% on the day, though they retreated in after-hours action. Despite the rally, the stock remains roughly 51% lower year-to-date and a long way from its 52-week high of $316.98, reflecting the broader selloff in software names amid uncertainty over AI's impact on the sector.
Investors have been grappling with the question of whether AI agents will drive subscription revenue growth or render some workflow products obsolete. Monday.com's quarter offered some clarity, with AI-driven products accounting for about 10% of net new annual recurring revenue (ARR). Co-CEO Eran Zinman emphasized that the company's new monday AI Work Platform is not merely a feature release or rebranding but a strategic shift. The company is steering new customers toward a seats-plus-credits pricing model that blends standard user seats with AI usage credits.
Executives highlighted strong momentum with larger clients. Customers generating more than $100,000 in ARR increased 39% to 1,844, while those above $500,000 jumped 74% to 99. GAAP operating income was $19.8 million, and non-GAAP operating income reached $49.0 million. GAAP net income landed at $28.0 million. Co-founders and co-CEOs Roy Mann and Eran Zinman described the quarter as one of disciplined execution and ambitious building. CFO Eliran Glazer noted that AI-driven productivity could allow revenue growth without proportional headcount increases.
However, the path forward is not without hurdles. Zinman acknowledged that modeling agent and token usage remains challenging, and the company faces the risk of rivals undercutting its AI pricing. Monday.com is projecting second-quarter revenue between $354 million and $356 million, representing 18% to 19% growth. For full-year 2026, the company now expects revenue of $1.466 billion to $1.474 billion, a 19% to 20% increase. Adjusted free cash flow is forecast at $280 million to $290 million. These figures incorporate a foreign-exchange drag of 100 to 200 basis points.
Management also flagged potential risks, including a projected dip in net dollar retention later this year and margin pressure if AI computing costs rise faster than revenue. The company's dependence on both traditional and AI-driven search traffic remains a concern. Additionally, Monday.com repurchased approximately 7.27 million ordinary shares last quarter, spending $553 million and reducing its buyback authorization to $182 million. While this move could boost per-share metrics, it also reduces cash reserves needed for AI expansion and acquisitions.
In a strategic move to bolster its AI capabilities, Monday.com announced the acquisition of OneAI, a voice-agent startup whose tools are already in production. Zinman said integrating OneAI's technology into the company's AI suite and CRM offering is a priority, though rolling it out to a broader customer base will require careful execution.
Piper Sandler raised its price target on Monday.com to $90 from $85 while maintaining a neutral rating, reflecting cautious optimism. The broader analyst consensus shows 17 buys, 7 holds, and 1 sell, with an average price target of $144.30. The wide spread underscores the market's uncertainty: strong quarterly results are on the table, but conviction that the company can successfully monetize AI at scale has yet to fully materialize.
