1Q26 Earnings: Record Beat with Seats Growing and AI Ramping. Lowering PT to $115.

研报英文原文证据摘录

1Q26 Earnings: Record Beat with Seats Growing and AI Ramping. Lowering PT to $115.

Callback Notes

■ Lowered NDR Expectations. As mentioned on the earnings call, MNDY now expects a modest step-down in FY26 NDR. Gross

retention remains at an all-time high, and the company continues to see solid momentum upmarket, but a few factors

are creating temporary pressure on NDR: (1) Softer top-of-funnel trends within SMB, where newer customers tend to land

smaller/appear less likely to expand near-term; (2) A growing mix of larger, multi-year ENT deals, where ARR progression is

more structured over time; and (3) The rollover of pricing changes taken over the last couple of years, which will continue toAPPLICATION weigh on the $50K+ and $100K+ cohorts through FY26. Altogether, management suggested these dynamics could pressure

NDR by roughly 100-200bps before expansion improves again next year, though we get the sense the headwind could be closer

to ~100bps. Although NRR among MNDY's $50k+ customer cohort is higher than its $100k+ customer cohort, the company

noted when adjusting for rounding dynamics, the gap is less pronounced.

■ Growth Drivers & FX/Inorganic. Growth drivers in the quarter were (1) AI revenue becoming more meaningful; (2) Strong

momentum upmarket; and (3) More ramped, quota-carrying reps were fully onboarded towards the end of Q1. AI representedSOFTWARE ~10% of Q1 NNARR, up from the low-single-digit range in Q4, with blocks remaining the largest contributor. That said, vibe

adoption continues to stand out as the company’s fastest-growing product, and management expects it to overtake blocks in

NNARR mix shortly. FX had a minimal impact in the quarter, and MNDY is assuming no meaningful foreign currency benefit/

headwind in its full-year revenue guidance.