Citi: Monday.com likely to benefit from enterprise customers in third quarter; AI services investment may affect next year's margins

What are the key issues for third-quarter results?

Citi is cautiously optimistic about Monday.com's third-quarter results, expecting a modest beat driven by enterprise customers. The company plans to report results before the US market opens on 9 November.
Citi believes investor expectations remain low: a revenue beat of 2.5 to 3 percentage points, coupled with unchanged fourth-quarter guidance, may be enough to meet revenue expectations; margins will depend on subsequent investment.

Citi uses website and mobile app data to track SMB demand: total traffic fell 11% year over year in September 2026, matching the decline in June; total traffic rose 2% quarter over quarter in the third quarter, indicating some stabilization at a low level in customer acquisition channels.
But the paid-user proxy continued to weaken. The metric, which combines login-page visitors and iOS app users, fell 20% year over year in the third quarter, a larger decline than the 17% drop in the second quarter, indicating that the traffic improvement has yet to carry through to this user metric.
Organic and paid search traffic fell 7% and 21% year over year, respectively, in the third quarter. Email and generative AI search traffic rose 11% and 108% respectively, but accounted for only 6% and 1% of total traffic, too little to offset weakness in traditional channels.

Citi's discussions with customers and partners indicate that enterprises are interested in integrating more workflows into the Monday.com platform and are also exploring AI applications. This underpins the bank's expectation that enterprise business can offset some of the pressure in the SMB segment.
However, many customers still need help with data management, workflow design and implementation. The company's new Frontier model expands its managed services and forward-deployed engineering teams in the hope of driving adoption of AI products among large customers.
Citi expects Frontier to require investment through 2027 before it can potentially become a significant growth driver; AI is expected to provide limited support to growth in the near term.

The company presented its 20% workforce reduction in July as a way to streamline the organization and redirect resources to AI. Citi believes expanding Frontier may require increased investment in 2027, offsetting some of the margin improvement from the layoffs; hiring remains limited for now.
Customer acquisition spending is also being adjusted: performance marketing expenditure fell 16% year over year and 1% quarter over quarter in the third quarter. Citi believes this is consistent with the company's shift away from aggressive expansion of paid-click advertising toward sales-led growth and other non-search channels.
Citi maintains its Buy, High Risk rating and a price target of 132 dollars. The bank believes marketing channel pressures and long-term AI risks are fairly well reflected in the valuation, but greater investment in growth could still weigh on margins.