Monday.com (NASDAQ:MNDY) stock fell Monday after the work management software company issued a fourth-quarter revenue forecast below Wall Street expectations, overshadowing stronger-than-expected third-quarter results.
The company reported third-quarter revenue of $377.535 million, up 19% year over year and above analysts’ estimate of $369.169 million. Adjusted earnings of $2.14 per share beat the consensus estimate of $1.37.
Net dollar retention reached 108%, while retention among customers with more than 10 users stood at 112%.
Customers generating more than $50,000 in annual recurring revenue (ARR) increased 26% to 5,038.
Adjusted operating margin expanded to 24% from 15% a year earlier.
However, operating cash flow fell to $20.4 million from $95.1 million. Adjusted free cash flow declined to $63 million from $92.3 million.
Monday.com ended the quarter with approximately $1.1 billion in cash, cash equivalents, and marketable securities.
AI Push Reshapes Growth Strategy
Monday.com is shifting toward an AI-first, enterprise-focused business model, even as the transition pressures near-term growth and cash flow.
Co-CEO Roy Mann outlined plans to expand enterprise adoption through hybrid seat-and-AI usage pricing and implementation services under Monday Frontier.
Co-CEO Eran Zinman said AI ARR reached $36 million, supported by stronger adoption among larger customers.
CFO Eliran Glazer attributed the record 24% adjusted operating margin partly to workforce reductions and lower expenses. However, the company plans to reinvest most of the roughly $100 million in gross restructuring savings into AI, employee compensation and other business initiatives.
Management expects longer enterprise sales cycles, cautious AI spending, and weakness among small and midsize businesses to remain challenges through 2027.
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Fourth-Quarter Forecast Disappoints
Monday.com forecasts fourth-quarter revenue of $380 million to $382 million, below the analyst consensus of $385.665 million. It expects an adjusted operating margin of approximately 18%.
Revenue growth is expected to slow to about 14% in the fourth quarter from 19% in the third quarter. Glazer warned that weak demand from smaller businesses and longer enterprise sales cycles could persist into 2027. He added that stabilizing revenue growth would take several quarters.
For 2026, the company raised its revenue forecast to $1.473 billion-$1.475 billion from its previous outlook of $1.466 billion-$1.474 billion. Analysts expect $1.471 billion.
Monday.com also increased its full-year adjusted operating margin forecast to approximately 18% from 16%.
The company expects adjusted free cash flow of $282 million-$288 million, representing a 19%-20% margin.
MNDY Price Action: Monday.com shares fell 7.31% to $81.50 at the time of publication Monday, according to Benzinga Pro.
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