Monday.com reports Google AI search changes impacting traffic acquisition

Monday.com disclosed on August 11, 2025, that changes to Google's search algorithms and the rollout of AI-generated summaries have created headwinds for customer acquisition, marking one of the first major software companies to publicly quantify the impact of Google's artificial intelligence features on business performance.

The work management platform reported $299 million in revenue for the quarter ended June 30, 2025, representing 27% year-over-year growth. However, executives addressed ongoing challenges in the lower end of their market during the earnings call, citing Google's search modifications as a contributing factor to softer-than-expected demand generation metrics.

"We are seeing some pressure from Google on the new side, though it's not something we didn't encounter before," stated Roy Mann, co-CEO of Monday.com. The company emphasized that the impact remains "considerably small" but acknowledged sufficient concern to adjust forward guidance.

Enterprise strength masks SMB weakness

Monday.com added 258 net new customers paying over $50,000 annually and a record 144 customers exceeding $100,000 in annual recurring revenue during the quarter. The enterprise segment demonstrated robust health, with the company's highest-value cohort showing 117% net dollar retention.

The softer performance centered on small and medium-sized business acquisition, where Monday.com historically relied on performance marketing channels including Google Search. This segment faced compounded pressures from both Google's June 2025 core algorithm update and the expanded deployment of AI Overviews, which now operate in 200 countries and 40 languages.

"Some of it is seasonality. Part of it is the pressure Eliran and Roy mentioned in the low end of the market," explained Eran Zinman, Monday.com's co-CEO. The company's CRM product, which recently crossed $100 million in annual recurring revenue, experienced slower account additions than previous quarters—a metric executives attributed partly to the search environment changes.

The disclosure arrives amid intensifying scrutiny of Google's AI Overviews, which research indicates reduce click-through rates to websites by 34.5% when appearing in search results. For software companies dependent on inbound marketing strategies, these changes fundamentally alter customer acquisition economics.

Quantifying the search impact

Monday.com executives declined to provide specific percentage impacts during the August 11 earnings call but characterized the effect as affecting "volume rather than quality" of prospect traffic. The distinction matters: while fewer users click through from Google Search results, those who do demonstrate comparable conversion intent to historical patterns.

"The better high-quality customers still click on Google and ads. If you're looking for solution such as a CRM or project management, you're going to reach us," Mann stated. The company's analysis suggests Google's algorithm changes primarily reduce top-of-funnel volume for lower-intent searches rather than degrading lead quality for commercial queries.

The timing coincides with Google's June 2025 core update, which required 16 days to fully implement after beginning June 30—longer than typical algorithm adjustments. Multiple tracking platforms documented substantial ranking volatility throughout July, affecting websites globally.

Monday.com's experience validates broader industry concerns. Publishers and digital marketers have documented traffic declines ranging from 70% to 95% following algorithm changes implemented since September 2023's Helpful Content Update, though software-as-a-service companies generally face less severe impacts than content publishers.

Strategic response and mitigation

The company implemented immediate tactical responses to address the search headwinds. According to Mann, Monday.com shifted marketing resources away from underperforming Google channels toward alternative acquisition methods including YouTube, display advertising, and other media platforms where the company maintains "a big brand and monitors all the performance stuff."

"We see areas that we are more efficient in so we move resources there," Mann explained. The company emphasized its diversified go-to-market approach, noting that existing customer expansion through product cross-selling and upselling represents a growing proportion of revenue growth.

CFO Eliran Glazer indicated that forward guidance incorporates conservative assumptions about continued search environment challenges. For the third quarter of fiscal 2025, Monday.com projects revenue between $311 million and $313 million, representing 24% to 25% year-over-year growth—a modest deceleration from the 27% growth achieved in Q2.

"We want to make sure that we deliver the most accurate and transparent outlook possible. And this is something that we took into account," Glazer stated regarding the Google impact baked into guidance.

Multiproduct strategy as counterbalance

Monday.com's portfolio expansion beyond its core work management product provides partial insulation from search-driven acquisition challenges. The company now offers separate solutions for customer relationship management, software development, and IT service management—products that rely more heavily on direct sales motions than inbound marketing.

Monday CRM's milestone of $100 million in annual recurring revenue, achieved approximately three years after launch, demonstrates the company's ability to scale products through channels less dependent on organic search traffic. The CRM product added 33,479 total accounts as of quarter-end, though the 6% sequential growth represented a slowdown from historical patterns.

Monday Service, the company's IT service management offering, showed stronger momentum with 45% quarter-over-quarter growth to 1,008 accounts. Executives highlighted service as particularly exciting because "it's not the same go-to-market. It's not Google, if you like. It's from existing customers."

The strategic pivot toward enterprise customers and product bundling reduces Monday.com's exposure to search algorithm volatility. Customers paying over $50,000 annually now represent 38% of annual recurring revenue, up from 33% a year earlier—a segment where direct outreach and relationship selling predominate over inbound marketing.

AI investments and product differentiation

Monday.com framed its response to competitive pressures through accelerated artificial intelligence product development rather than increased marketing spend. The company announced three new AI capabilities during the quarter: Monday Magic, Monday Vibe, and Monday Sidekick.

Monday Magic transforms natural language prompts into complete workflow solutions, enabling users to describe business problems and receive configured systems without manual setup. Monday Vibe provides a low-code development environment for building custom applications integrated with the platform. Monday Sidekick functions as a proactive digital assistant that suggests and executes actions based on user context.

The AI features collectively generated 46 million actions since launch, with adoption accelerating after the company began charging for usage above 500 monthly credits per user. "We're starting to see kind of more revenue accumulated from the AI action," Zinman reported.

Mann positioned the AI capabilities as addressing a different category of customer value than traditional software features. "We have all the context. We know everything people are trying to achieve because it's in Monday, their project, their context, their history. And so we are able to create with a single click an AI that helps you accomplish the actual work," he explained.

Marketing leadership transition

The company appointed Harris Beber as Chief Marketing Officer during the quarter, based in Monday.com's New York City office. Beber brings over 20 years of marketing leadership experience, most recently overseeing global marketing for Google Workspace and previously serving as CMO at Waze and Vimeo.

The timing of Beber's appointment amid search traffic challenges appears coincidental rather than reactive. Monday.com had been conducting an executive search for several months as part of its ongoing maturation as a public company. The company also created a new Chief Customer Officer role, promoting internal executive Adi Dar to the position.

Beber's background at Google Workspace—a direct competitor in some segments—provides relevant experience navigating enterprise software marketing. His appointment signals Monday.com's continued investment in brand-building and diversified customer acquisition channels beyond performance marketing.

Financial performance and outlook

Beyond the search-related commentary, Monday.com delivered solid financial results that demonstrated the underlying strength of its business model. The company achieved non-GAAP operating income of $45.1 million with a 15% operating margin, compared to $38.4 million and 16% margin in the year-ago quarter.

Adjusted free cash flow totaled $64.1 million, representing a 21% margin. The company maintains $1.59 billion in cash and equivalents, up from $1.53 billion at the end of Q1. Management reiterated commitment to generating over $1 billion in adjusted free cash flow between fiscal 2023 and fiscal 2026.

Net dollar retention rate measured 111% overall, stable with the prior quarter after declining from 112% in Q1. The metric held steady at 117% for customers exceeding $100,000 in annual recurring revenue. Executives expect retention rates to remain at 111% throughout fiscal 2025, with potential expansion in early 2026 as larger enterprise customers mature.

Gross margin remained at 90% on a non-GAAP basis. Research and development expense increased to 20% of revenue from 16% in the year-ago quarter, reflecting continued product innovation investments. Sales and marketing expense improved to 47% of revenue from 51%, demonstrating operating leverage despite search headwinds.

Broader industry implications

Monday.com's disclosure adds to growing evidence of material business impacts from Google's AI search features. In July 2025, Alphabet reported that AI Overviews were driving 10% additional queries in major markets, though the company has not publicly acknowledged corresponding traffic declines for third-party websites.

The situation presents strategic challenges for Google's ecosystem relationships. Publishers and software companies increasingly argue that search engines depend fundamentally on their content yet bear financial consequences of algorithmic changes with minimal input into system modifications.

For the SaaS industry, Monday.com's experience suggests that companies relying heavily on inbound marketing may face sustained customer acquisition cost increases as Google prioritizes direct answer provision over website referrals. The shift appears particularly pronounced for simpler, more commoditized software categories where AI summaries can adequately address user questions without requiring website visits.

Monday.com's strategic responses—enterprise market focus, direct sales investment, product bundling, and channel diversification—offer a playbook for other software companies navigating similar dynamics. The company's ability to maintain 27% growth despite search headwinds demonstrates that performance marketing dependency remains manageable for established brands with differentiated products.

What the marketing community needs to know

The Monday.com disclosure matters for digital marketing professionals because it provides rare quantitative validation from a publicly traded company about Google search changes that many practitioners have observed anecdotally. While publishers have vocally complained about traffic declines since 2023, SaaS companies generally share less detailed performance commentary.

The distinction between "volume" and "quality" impacts represents an important nuance. Research published by Ahrefs in May 2025 found that organic click-through rates for queries featuring AI Overviews dropped from 1.41% to 0.64% year-over-year, marking a 54.6% decrease. However, Monday.com's assertion that remaining traffic maintains conversion quality suggests these changes redistribute rather than eliminate demand.

Marketing teams should evaluate channel diversification strategies rather than abandoning Google entirely. Monday.com's tactical response—reallocating budgets toward higher-performing channels while maintaining presence in search—demonstrates pragmatic adaptation rather than wholesale strategic pivots.

The company's emphasis on brand strength and existing customer expansion through product-led growth provides strategic direction for businesses facing similar acquisition headwinds. As inbound marketing becomes more expensive and less predictable, customer retention and expansion take on heightened importance.

The broader context includes Google's expansion of AI-powered search features to 200 countries and 40 languages as of May 2025, with CEO Liz Reid publicly asserting that advertising revenue "has been relatively stable" despite reduced organic click-through rates. This disconnect between Google's revenue stability and third-party traffic declines suggests that advertising budgets may need to increase to maintain previous performance levels.

For performance marketers, Monday.com's experience validates the need for sophisticated attribution modeling that distinguishes between algorithmic impacts and campaign performance issues. The company's ability to "optimize in real-time" and "budget on a daily basis" reflects the operational maturity required to navigate volatile search environments effectively.

Timeline

• September 2023: Google's Helpful Content Update begins impacting publisher traffic
• March 2025: Google implements core algorithm update lasting 14 days
• May 2025: Google expands AI Overviews to 200 countries and 40 languages
• June 30, 2025: Google begins June 2025 core update rollout
• July 17, 2025: June 2025 core update completion after 16-day implementation
• August 11, 2025: Monday.com reports Q2 2025 earnings, acknowledging Google search impact
• August 30, 2025: Google's search liaison discusses AI features and algorithm changes at WordCamp
• September 5, 2025: Google acknowledges search algorithm challenges
• October 10, 2025: Google search chief Liz Reid addresses AI transformation impacts

Related Coverage

• Google's June 2025 core update brings dramatic ranking changes
• Google's AI Overviews face significant spam problem
• Google breaks publishers' business models with new AI search experiment

Summary

Who: Monday.com, a publicly traded work management platform with approximately 245,000 customers, disclosed the business impact during its Q2 fiscal 2025 earnings call on August 11, 2025. Co-CEOs Roy Mann and Eran Zinman and CFO Eliran Glazer addressed investor questions about the search environment challenges.

What: The company reported that Google's search algorithm updates and expanded deployment of AI Overview features have reduced traffic volume for customer acquisition, particularly affecting small and medium-sized business segments. While the company maintained 27% revenue growth to $299 million and added a record 144 customers exceeding $100,000 in annual recurring revenue, executives acknowledged softer performance in lower-tier customer acquisition channels historically dependent on Google Search traffic.

When: The impacts became apparent during the second quarter of fiscal 2025 (April through June 2025), coinciding with Google's June 2025 core algorithm update that began June 30 and completed July 17. The company's forward guidance for Q3 and full fiscal year 2025 incorporates assumptions about continued search environment challenges, suggesting executives expect the conditions to persist through at least December 2025.

Where: The search traffic impacts primarily affected Monday.com's small and medium-sized business customer acquisition efforts, which historically relied on inbound marketing channels including Google Search. The company's enterprise segment, which utilizes direct sales approaches and relationship-building rather than performance marketing, demonstrated continued strength with record customer additions in the highest-value cohorts.

Why: Google's implementation of AI-generated answer summaries (AI Overviews) at the top of search results reduces the percentage of users who click through to third-party websites. Research indicates that AI Overview presence correlates with 34.5% lower click-through rates compared to traditional search results. Combined with algorithm changes that affect organic ranking positions, these modifications alter the fundamental economics of customer acquisition for companies dependent on inbound marketing strategies.