Monday.com's AI Maximalist Playbook
How a comprehensive AI and GTM transformation strategy is flying under the radar while the stock trades near lows
I voluntarily spent my morning listening to Monday.com's investor day - because apparently when you're “between adventures”, corporate PowerPoints become binge-worthy content—and there were some compelling takeaways worth unpacking. Here is my stream of consciousness on the event :
AI is now a core tenet of the product. When Monday jumped on the AI bandwagon, its core AI offering was AI Blocks—building blocks that allowed customers to infuse AI into Monday boards. Now Monday is going on the offensive by introducing several AI products that appear to be focused on accelerating product adoption (Monday SideKick and Monday Magic) as well as allowing customers to develop new new apps on top of Monday (Monday Vibe).
Monday's embrace of vibe coding is particularly interesting as it neutralizes a key bear thesis: that many applications in the ecosystem face a terminal value problem due to the rise of vibe coding. Built on top of MondayDB, it provides full context of enterprise data along with existing guardrails (data security and governance), likely making it much easier for users to build. However, it's unclear how extensive the apps you can create with Monday Vibe will be versus general-purpose vibe coding platforms (like Lovable or Replit)—though the latter struggle with enterprise data integration and often need back-end tools like Make. Monday also reported that over 17K apps have already been built using Monday Vibe.
Monday also introduced AI agents, including an SDR agent for sales. While I'm typically skeptical about AI bot capabilities, the recorded demo looked promising.
Monday is evolving its monetization through a hybrid model where some AI products will use usage or outcome-based pricing alongside seat-based pricing, reducing dependence on seats alone. This neutralizes another emerging bear thesis around the disruption of seat-based pricing models. The company hasn't finalized the consumption pricing model details, which are expected in the coming weeks. For context, AI Blocks initially priced at 8¢ per AI Action, and with roughly 80M annualized actions this year, that implies $6.5M ARR.
Monday is executing a comprehensive go-to-market strategy, likely for the first time in its history. The strategy focuses on clarifying ownership and incentives, leveraging AI agents for high-touch responsiveness at scale, and driving multi-product adoption to increase ACV.
Monday is creating clear account ownership models. Account Managers own the relationship while Customer Success Managers drive value realization and product depth, reducing overlapping stakeholders. To drive desired behaviors, compensation plans are being redesigned to incentivize expansion and cross-selling, with KPIs pushed to the lowest operational level and clear "what good looks like" definitions. For instance, Account Managers will have 75% of variable compensation tied to new growth and 25% tied to retention, while CSMs have the opposite split, motivating both teams across these two dimensions.
AI-driven selling at scale leverages production AI agents that now qualify leads, route resources, summarize opportunities, create CRM entries, and schedule meetings—all within minutes. Early results mirror their SDR agent success: ~1,000 calls handled, ~250 meetings booked, and ~180 leads generated, driving 20% better conversions. The goal is delivering high-touch, fast responses to every inbound lead without proportional headcount increases.
Intentional upmarket expansion from SMB to mid-market. While there's been clear intention to move upmarket, the company is being more intentional and clear-eyed than I've ever heard them before. The CRO made it clear that Monday will move aggressively into mid-market (100-1,500 employee companies) and "let the market come to us in enterprise" in terms of being pulled further upmarket (which is happening). This is likely the right move—there's still significant opportunity in mid-market, and companies often stumble when transitioning upmarket too quickly, jumping from SMBs directly into the F500.
Monday also highlighted a solution selling and bundling strategy across the three customer segments, though details on pricing were scarce. While there's opportunity to bundle the full suite in the SMB segment, Monday wants to approach enterprise primarily with CWM and Service, both of which have natural upmarket affinity.
SEO-related headwind appears limited. One of the bear thesis in this space in general has been the introduced by Google's evolving search algorithms and the shift toward AI-powered search experiences. The concern is that changes in Google's algorithm are affecting the down market, impacting customer acquisition for companies (Like Monday, Asana, ClickUp and others) that have historically relied on paid/organic search traffic for new customer acquisition. This was a major topic of discussion last quarter when the beat narrowed and the company didn’t flow through the beat into the full year guide, driving the stock down by ~30% the next day.
Today, in the investor day, the company addressed this head-on, noting that only 10% of new ARR comes from Google. Additionally, Monday noted that while the entire CWM category saw a 16% decline in clicks through Google in Q2, Monday experiences only a 9% decline, implying some share gains. This seem to indicate that SEO headwind might have led to a roughly 1% headwind to new ARR last Q, which might explain a lot, if not all, of the beat variance.
Additionally, the company is also investing in newer channels — AI‑search engines (OpenAI, Google, Anthropic), AI‑assisted performance marketing, partner/ecosystem, and field/community — which should diversify demand over time beyond classic SEO. Furthermore, Monday is seeing good returns in the marketing investments around Sales-led growth (SLG), which should pay dividends over time.
Monday is also embracing AI internally, which is driving material productivity gains from its comprehensive AI transformation internally, enabling the company to scale with significantly fewer incremental hires. The company halted R&D for an entire month to re-architect workflows around AI, resulting in faster product cadence, higher service quality, and materially better engineering productivity.
Concrete results include
releasing 3 major AI capabilities in just the last 3 months, reducing their biggest tech debt project from 33 developer years to just 5 months (a 20x improvement), and achieving 21% faster onboarding of new engineer hires.
Product quality has improved dramatically, with complex customer ticket handling times dropping from 3 days to 1 day in automation and 100% higher test coverage achieved in 6 months.
Engineering teams are also 60% faster at root-cause investigation of complex board-related issues.
This "AI-first" posture extends across all functions, with live AI agents now handling lead qualification, resource routing, opportunity summarization, CRM entries, and meeting scheduling in minutes.
The productivity boost is allowing Monday to "scale with fewer incremental people," modeling headcount growth to slow from the mid-30s to ~20% by H1'27, with AI impact baked into 2026 and forward planning.
Management expects AI compute costs to modestly compress gross margin from roughly 90% to the mid‑80% range as usage scales and agents/AI features run more workloads. They view this as a deliberate investment in product velocity and customer value, to be offset by operating leverage (especially in S&M), hybrid monetization of AI, and efficiency gains from AI‑driven productivity across the org. Net: a few hundred bps headwind near term, with margin durability maintained at scale.
Monday.com likely pulled a classic "under-promise, over-deliver" move with their FY27 guidance.The company provided a $1.8B revenue target, inline with consensus and implying a 21% CAGR from 2025-2027 - a very respectable growth rate at that scale. While it landed toward the low end of my expectations (low to mid-20s%), I think the company learned its lesson from the prior analyst day when it came out with a 25-35% growth target that proved pretty aggressive in hindsight (although they'll likely hit $1.6B in 2026). So the guide looks intentionally conservative to me.
The guide looks conservative to me because - per my math, this effectively assumes core Work Management growth normalizes to the mid‑teens, with NNARR from core declining. Although pricing did benefit the company in 2024-2025, I believe there are still a number of growth levers to continue to drive core growth in the high-teens to 20% including upmarket traction unlocked by MondayDB (3.0 rolling out now), AI monetization and opportunity around enterprise add‑ons (Resource Planner, governance, mondayDB benefits).
First Share Buy back Program. Monday authorized an opportunistic share repurchase program of up to $870 million (just under 10% of market cap), funded from its ~$1.6B cash balance and strong FCF generation. Management framed buybacks as a complement to—not a substitute for—growth investments and tuck‑in M&A.
Bottom line: Monday.com is executing a compelling transformation while trading near multi-year lows—the risk/reward here looks very attractive. My back-of-envelope math suggests the company will generate north of $8.7/share in uFCF during 2026, assuming roughly 24% revenue growth and a stable 30% FCF margin. Applying a conservative 25x multiple (factoring in $32/share net cash and 54M shares outstanding) gets me to a $250 target—30% upside from current levels. The 25x multiple is deliberately conservative, representing essentially 1x growth-adjusted EV/uFCF, when quality software typically trades at much higher growth-adjusted multiples.
Thanks for the thorough and timely recap. This is one of my biggest positions.
Thanks for the interesting analysis.