Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $317 million, representing a 26% increase year-over-year [9] - Non-GAAP operating income reached a record $47.5 million, up from $32.2 million in Q3 2024, with an operating margin of 15% [10] - Net income was a record $61.9 million, compared to $45 million in Q3 2024, with diluted net income per share at $1.16 [10] - Gross margin for Q3 was 90%, with expectations for medium to long-term gross margin in the high 80s range [9][10] - Adjusted free cash flow for Q3 was $92.3 million, with an adjusted free cash flow margin of 29% [11] Business Line Data and Key Metrics Changes - New products accounted for over 10% of total ARR, surpassing the 2025 goal ahead of schedule [6] - The new AI-powered Monday Campaigns product saw rapid adoption since its launch in September [7] - Monday Vibe has led to the creation of over 60,000 apps, indicating strong customer engagement [7] Market Data and Key Metrics Changes - The company reported robust net additions of over 100,000 paying customers, totaling over 500,000 [4] - The overall net dollar retention (NDR) was 111% in Q3, with expectations to remain stable for fiscal year 2025 [9] Company Strategy and Development Direction - The company is focused on transitioning to a multi-product and AI-powered platform, aiming for a revenue target of $1.8 billion by FY2027 [4][5] - Investments are being rebalanced towards mid-funnel channels to target larger opportunities, despite longer sales cycles [6] - The introduction of product bundles aims to provide a unified experience and accelerate cross-sell momentum [6][39] Management's Comments on Operating Environment and Future Outlook - Management noted healthy demand across all customer segments, particularly for AI features and products [18] - The company is optimistic about the future, citing strong customer engagement and a healthy pipeline heading into 2026 [5][20] - There is confidence in achieving the $1.8 billion revenue target for FY2027, supported by trends in customer expansion and product adoption [75] Other Important Information - The company ended Q3 with $1.53 billion in cash and cash equivalents, down from $1.59 billion at the end of Q2 [11] - Employee headcount increased to 3,018, with expectations for a 30% growth in fiscal year 2025 [10] Q&A Session Summary Question: Customer spending priorities for 2026 - Management observed a transition in customer demand across all segments, with increased interest in AI features and products [17] Question: Impact of go-to-market transition on results - The transition towards larger deals is yielding higher quality pipelines, although it comes with longer sales cycles [19] Question: Dynamics of deferred revenue - Management clarified that deferred revenue is not a perfect measurement due to cash basis accounting, and RPO is a better metric for future growth visibility [26] Question: Guidance for 2026 - Initial expectations for fiscal year 2026 will be provided in the next quarter, with confidence in achieving the $1.8 billion target by FY2027 [27][75] Question: Investment focus for 2026 - The company plans to moderate headcount growth and focus investments on sales, product, and R&D [34] Question: Adoption of AI products - Early traction has been noted for AI offerings, with significant customer engagement and use cases emerging [56][59] Question: Performance marketing channel dynamics - Management reported stabilization in new sign-ups and top-of-funnel activity, with a shift towards higher ROI channels [65] Question: RPO metric adjustments - Adjustments to the RPO metric were made for consistency and accuracy following auditor reviews [86]

Core Insights - The enterprise software market is experiencing significant growth, with a projected increase from $263.8 billion in 2024 to $517.3 billion by 2030, reflecting a 12.1% CAGR [2] - Both monday.com (MNDY) and Salesforce (CRM) are central players in this market shift, with Salesforce having a long-standing dominance in enterprise CRM and monday.com emerging as a flexible Work OS [1][2] Summary of monday.com (MNDY) - monday.com is facing challenges in sustaining growth, particularly in enterprise workflows, which has revealed gaps in depth and efficiency [3] - The monday CRM extension is gaining traction but has modest annual recurring revenue of $100k, with high R&D costs at $59.2 million (20% of revenues) and sales and marketing expenses at $139.2 million (47% of revenues) [4] - The core Work Management product saw a 27% year-over-year revenue increase to $299 million, but customer acquisition costs are high, and net dollar retention has slipped to 111% [5] - AI initiatives are adding costs without proving significant returns, with a non-GAAP operating margin of 15%, down from 16% a year ago [6] - The Zacks Consensus Estimate for 2025 earnings is $3.93 per share, reflecting a 3.7% increase over the past 30 days [7] Summary of Salesforce (CRM) - Salesforce is a leading enterprise software provider with a multi-cloud portfolio that includes sales, service, marketing, integration, and analytics, leveraging AI in newer tools like Data Cloud and Agentforce [8] - Sales and Service Clouds are the largest revenue contributors, but their maturity limits incremental growth; however, AI initiatives like Data Cloud and Agentforce generated $1.2 billion in recurring revenues, up 120% year-over-year [9][11] - Salesforce's total remaining performance obligation reached $59.9 billion, up 10% year-over-year, with a non-GAAP operating margin of 34.3% [12] - The Zacks Consensus Estimate for fiscal 2026 earnings is $11.30 per share, indicating an improvement over the previous year's earnings of $10.2 per share [13] Price Performance and Valuation - In the past three months, monday.com's stock has declined 40.6%, while Salesforce's shares fell 8.9%, reflecting investor concerns over MNDY's high spending and slowing customer expansion [14] - monday.com trades at a forward P/S ratio of 6.66X, higher than Salesforce's 5.65X, but faces execution risks and profitability pressures [17] - Salesforce's lower P/S multiple appears more balanced due to its scale, margin consistency, and visibility from long-term contracts [17] Conclusion - Both companies operate in attractive segments of the enterprise software market, but monday.com is struggling with high spending and slowing customer expansion, limiting its valuation premium [19] - Salesforce benefits from a broader portfolio and stable margins, providing better visibility for investors [19] - The Zacks Rank indicates CRM as a hold and MNDY as a strong sell, suggesting CRM holds a relative edge [20]